The SafeMoon decentralized finance protocol experienced a significant downturn as its token dropped by 31% over a span of just 5 hours after the company declared bankruptcy. This formal filing, under Chapter 7 bankruptcy, took place in the U.S. Bankruptcy Court in Utah, as confirmed by a voluntary petition submitted by attorney Mark Ross, with Judge Joel Mark presiding over the case. A letter attributed to the company's chief restructuring officer, posted on Reddit, indicated that the inability to compensate employees was the reason for filing bankruptcy, suggesting that unpaid wages would need to be addressed through the bankruptcy court's claims process.
Previously, just a month before this bankruptcy filing, the U.S. Securities and Exchange Commission (SEC) had charged SafeMoon, along with its founder Kyle Nagy, CEO John Karony, and chief technology officer Thomas Smith, for breaching securities laws. The regulatory body labeled it as a "massive fraud scheme."
The SafeMoon (SFM) token, as per CoinGecko data, plummeted from $0.000065 at 8:24 pm UTC on December 14 to $0.000045 within a short 5-hour duration. Despite this rapid drop, the token somewhat recovered to $0.000061 within 10 minutes, although its current value stands at $0.00005729. Comparatively, the token's decline is substantial, down by 98.2% from its peak price of $0.0033 on January 5, 2022, and its market cap has dwindled from a once $1 billion valuation to $34.5 million.
Numerous former supporters of SafeMoon took to Reddit to express their frustration and disappointment, asserting that they had been misled by SafeMoon's developers. Some users criticized the situation, acknowledging feeling deceived by the project's creators, while others lamented the financial losses they incurred. Santiago Melgarejo, a former analyst and sales expert at SafeMoon, recalled that warning signs were evident, especially when a significant number of employees were abruptly laid off despite enduring a month without compensation.
