SafeMoon fell 31% in the five hours after filing for Chapter 7 bankruptcy.
The tokens of decentralized finance protocol SafeMoon (SFM) fell 31% in the five hours after the company filed for bankruptcy.
Safemoon formally filed for Chapter 7 bankruptcy protection in the U.S. Bankruptcy Court for the District of Utah on December 14. The voluntary petition was filed by attorney Mark Rose with Chief Judge Joel T. Marker presiding over the case.
A screenshot of a letter sent to employees from the company’s chief restructuring officer was released on Reddit, explaining that the bankruptcy was the reason the company could no longer pay its employees prior to the bankruptcy filing.
“You must file a claim in bankruptcy court for unpaid wages,” the document says.
The blow comes just a month after U.S. securities regulators in November charged SafeMoon, founder Kyle Nagy, CEO John Karony and CTO Thomas Smith with violating securities laws.
According to CoinGecko, the cryptocurrency fell from $0.000065 at 8:24 PM UTC on December 14 to $0.000045 in the five hours following the news. However, it bounced back to $0.000061 in 10 minutes.
SMF fell 31% immediately after filing for bankruptcy, before recovering slightly. SFM is currently changing hands at $0.00005729. The token is down 98.2% from its all-time high of $0.0033 on January 5, 2022, and its once $1 billion market capitalization has now fallen to $34.5 million.
Several former SafeMoon supporters expressed their frustration on Reddit, reflecting on the bankruptcy and claiming they were bullied by SafeMoon developers.
Reddit user Jtenka said, “The truth is that everyone has been scammed by the SafeMoon developers, including mods who support and trust SafeMoon.”
Another Reddit user, “anonyamon42069,” said: “I don’t even want to talk about how badly we were all scammed, especially the money I lost. To those idiots who still think they have a chance at SafeMoon and will ‘go to the moon’, ask for help.”
Related: SafeMoon Hackers’ Use of Centralized Exchange Could Help Law Enforcement — Match Systems
Santiago Melgarejo, a non-fungible token analyst and former sales expert at SafeMoon, recalled that “there were always warning signs,” especially when large numbers of employees were suddenly laid off, even though they had been working without pay for a month.
I recently heard the news of Safemoon’s bankruptcy filing, and I can’t help but think that former colleagues and owners are facing frustration and anger as they have not been paid their salaries for a month.
Looking back, the warning signs were there. Especially when so many of us have been suddenly laid off on several occasions…
— Santi (@Santi_NFT) December 14, 2023
SafeMoon was also exploited in March, causing a net loss of $8.9 million.
magazine: Huawei NFT, Toyota Hackathon, North Korea vs. Blockchain: Asia Express
