The token of decentralized finance protocol SafeMoon (SFM) has fallen 31% in five hours after the company filed for bankruptcy.
Safemoon officially applied for Chapter 7 bankruptcy protection in a Dec. 14 filing to the United States Bankruptcy Court in the District of Utah, . The voluntary petition was filed by attorney Mark Rose with Chief Judge Joel T. Marker assigned to the case.
A screenshot of a letter to employees allegedly written by the firm’s chief restructuring officer surfaced on Reddit, explaining that its bankruptcy run was why it was no longer able to pay employee wages prior to the filing.
“You will need to file a claim in the bankruptcy court for your unpaid wages,” the document read.
The latest blow comes only a month after the United States securities regulator charged SafeMoon, its founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith in November for violating securities laws in what the regulator described as “a massive fraudulent scheme.”
The cryptocurrency fell from $0.000065 on Dec. 14 at 8:24pm UTC to $0.000045 over a five-hour period after the news, according to CoinGecko. It did, however rebounded back to $0.000061 in a rapid-fire 10 minute span.
SFM is down 98.2% from its highest price of $0.0033 on Jan. 5, 2022, and its once $1 billion market cap has now tumbled to $34.5 million.
Several former SafeMoon supporters expressed frustration on Reddit in reflection of the bankruptcy, alleging they were rug-pulled by the SafeMoon developers.
“The fact of the matter is, everyone has been scammed by the SafeMoon developers, including the mods that supported and trusted SafeMoon,” said Reddit user Jtenka.
Another Redditor, “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.”
Related: SafeMoon hacker’s use of centralized exchanges could help law enforcement — Match Systems
Santiago Melgarejo, a former nonfungible token analyst and sales specialist for SafeMoon, said in reflection that the “warning signs were there” all along, notably when many of the employees were abruptly fired despite many of them working 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…
— Santi (@Santi_NFT) December 14, 2023
SafeMoon was also exploited in March, resulting in a net loss of $8.9 million.
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