In a stunning turn of events, SafeMoon, the decentralized finance (DeFi) protocol, saw its token value plummet by 31% within just five hours following the official filing for Chapter 7 bankruptcy.
The voluntary petition for liquidation bankruptcy was submitted to the United States Bankruptcy Court for the District of Utah on December 14, 2023. Attorney Mark Rose filed the petition, and Judge Joel Marker has been assigned to preside over the case.
Bankruptcy declaration and employee consequences
A letter purportedly written by SafeMoon’s chief restructuring officer surfaced on Reddit, outlining the dire financial situation that led to the bankruptcy filing.
In the document, it was explained that the bankruptcy proceedings prevented the company from continuing to pay employee wages, instructing employees to file claims in the bankruptcy court for their unpaid wages.
This development adds to the woes of SafeMoon, which had been under the regulatory spotlight in recent times.
Regulatory troubles
Just one month prior to the bankruptcy filing, the U.S. Securities and Exchange Commission (SEC) had charged SafeMoon, its founder Kyle Nagy, CEO John Karony, and chief technology officer Thomas Smith with violating securities laws. The SEC characterized the allegations as part of “a massive fraudulent scheme.”
The SafeMoon (SFM) token’s value experienced a significant rollercoaster ride in response to these developments. On December 14, 2023, at 8:24 pm UTC, SFM was trading at $0.000065 per token.
However, within a five-hour period following the bankruptcy news, its value plummeted to $0.000045, as reported by CoinGecko. Remarkably, the token exhibited a rapid rebound, surging back to $0.000061 within a mere 10-minute span.
As of the latest available data, SFM is changing hands for $0.00005729. Nevertheless, it is worth noting that SFM has witnessed a staggering decline of 98.2% from its all-time high price of $0.0033 on January 5, 2022. Furthermore, its market capitalization, once valued at $1 billion, has now shrunk to a mere $34.5 million.
The bankruptcy announcement has elicited frustration and allegations from several former SafeMoon supporters on Reddit. Some have expressed feeling “rug-pulled” by the SafeMoon developers and criticized the moderators who supported and trusted the project.
One Reddit user, u/Jtenka, stated, “The fact of the matter is, everyone has been scammed by the SafeMoon developers, including the mods that supported and trusted SafeMoon.”
Another user, u/anonyamon42069, expressed their dissatisfaction, saying, “Never wanna even talk about how bad we all got scammed and especially the money I lost. To the idiots that still think SafeMoon has a chance and will ‘go to the moon’: seek help.”
Santiago Melgarejo, a former nonfungible token analyst and sales specialist for SafeMoon, reflected on the situation, emphasizing that there were warning signs all along.
Notably, many employees were abruptly fired despite working for a month without pay. Additionally, SafeMoon had previously been exploited in March, resulting in a net loss of $8.9 million.
From Zero to Web3 Pro: Your 90-Day Career Launch Plan
