SafeMoon, the decentralized finance protocol, has declared Chapter 7 bankruptcy amidst fraud charges from the US Securities and Exchange Commission (SEC) and arrests of key company members.
The SEC’s complaint alleges that SafeMoon executives diverted $200 million for personal use and sold unregistered securities. Consequently, the value of the Safemoon (SFM) token dropped by 54% and its market cap plummeted from $1 billion to $17.18 million.
The Bankruptcy Court filing in the US District of Utah signals that SafeMoon has been unable to sustain its operations, resulting in the termination of all current employees.
Furthermore, the SEC charges and arrests of CEO John Karony and CTO Thomas Smith by the Department of Justice (DoJ) have caused an uproar in the cryptocurrency community.
This case serves as a reminder of the risks inherent in the volatile and, at times, unregulated crypto space. Investors should always exercise caution and due diligence before investing in any speculative venture.