The decentralized finance (DeFi) protocol SafeMoon has officially filed for Chapter 7 bankruptcy protection amidst increasing allegations of fraud and mismanagement. The company’s founders—Kyle Nagy, Thomas Smith, and Braden Karony—are currently facing a $200 million SEC lawsuit for securities fraud, accusing them of misleading investors.
The bankruptcy filing follows a turbulent period marked by accusations of a carefully orchestrated scheme involving deception and manipulation, contributing to SafeMoon’s rapid ascent. The SEC has alleged that investors were provided with false assurances regarding the safety of their funds in the company’s liquidity pool, which, contrary to representations, could be withdrawn.
Safemoon Accused of Offering Unregistered Securities
The U.S. Securities and Exchange Commission (SEC) dealt a major blow to SafeMoon in November 2023 by filing a civil suit against founders Kyle Nagy, Thomas Smith, and Braden Karony. The lawsuit alleges a massive securities fraud scheme, claiming that the trio raised over $200 million through unregistered securities offerings and misappropriated substantial sums for personal use.
In response to the SEC action, Chief Restructuring Officer Kenneth Ehrler, in an internal communication to SafeMoon employees, announced the company’s Chapter 7 bankruptcy filing. The bankruptcy filing resulted in the immediate termination of all employment contracts, and employees were instructed to file claims for unpaid wages and benefits with the bankruptcy court.
Safemoon Token Dumps Following Bankruptcy News
Following the news of the Chapter 7 bankruptcy filing and the SEC lawsuit, the native crypto Safemoon experienced a significant drop in value, falling from $0.000065 to $0.000045 within a five-hour period. However, the cryptocurrency’s price recovered shortly after.
As of the latest available data, Safemoon is currently trading at $0.000059, reflecting a 9% decline in the last 24 hours, according to Coingecko data.
