Decentralized finance protocol SafeMoon experiences significant drop following bankruptcy filing
The value of SafeMoon (SFM), the token associated with decentralized finance protocol SafeMoon, has plummeted by 31% in just five hours after the company filed for bankruptcy. The filing was made on December 14th to the United States Bankruptcy Court in the District of Utah, with attorney Mark Rose submitting the voluntary petition. Chief Judge Joel T. Marker has been assigned to the case.
A letter allegedly written by the firm's chief restructuring officer was posted on Reddit, revealing that the bankruptcy filing had led to the company being unable to pay employee wages. The letter stated that employees would need to file a claim in the bankruptcy court to receive unpaid wages.
Latest setback for SafeMoon
This recent blow comes only a month after the United States securities regulator charged SafeMoon, along with its founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith, for violating securities laws. The regulator described the company's activities as "a massive fraudulent scheme."
Following the bankruptcy news, the value of the cryptocurrency dropped from $0.000065 to $0.000045 within a five-hour period, according to CoinGecko. However, it did experience a brief rebound to $0.000061 in just ten minutes.
SafeMoon's value has now fallen by 98.2% from its highest price of $0.0033 on January 5, 2022. Its market cap, which was once $1 billion, has now dropped to $34.5 million.
Disgruntled former supporters express frustration
On Reddit, several former SafeMoon supporters voiced their frustration and alleged that they had been deceived by the company's developers. One user, 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, anonyamon42069, said, "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, commented on the warning signs that were present, such as the abrupt firing of employees who had worked for a month without pay.
"Recently learned about SafeMoon's bankruptcy filing, and my thoughts are with my ex-colleagues who've been unpaid for a month, and the holders facing frustration and anger. Reflecting back, the warning signs were there – notably, when many of us were abruptly fired over several…"
It is worth noting that SafeMoon also suffered a net loss of $8.9 million due to an exploitation incident in March.
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