SafeMoon Crypto Files for Chapter 7 Bankruptcy: What Next?

• SafeMoon Sees Considerable Drop in Value Post Chapter 7 Bankruptcy Filing
• Bankruptcy Filing and Employee Wage Issues
• SafeMoon Faces Charges from SEC
• Effect on the Crypto Market
• Investor Dissatisfaction
• Potential Future of SafeMoon

SafeMoon Sees Considerable Drop in Value Post Chapter 7 Bankruptcy Filing

In an unforeseen series of events, the decentralized finance protocol SafeMoon (SFM) saw a staggering 31% dip in its token value within just five hours of officially declaring Chapter 7 bankruptcy. This significant decrease was coupled with a series of setbacks, most prominently the arrest of key team members by the US Department of Justice on allegations of large-scale customer fraud.

Bankruptcy Filing and Employee Wage Issues

SafeMoon initiated Chapter 7 bankruptcy, popularly known as "liquidation bankruptcy", on Dec. 14, causing ripples throughout the cryptocurrency community. Mark Rose, the attorney, filed the voluntary petition with the United States Bankruptcy Court in the District of Utah. Chief Judge Joel T. Marker was appointed to supervise the case.

A supposed letter from the firm's chief restructuring officer surfaced on Reddit, explaining that the bankruptcy filing was the main reason the company failed to meet its employee wage obligations before filing. The letter recommended employees to submit claims in bankruptcy court to recover their unpaid wages.

SafeMoon Faces Charges from SEC

This significant roadblock came just a month after the United States Securities and Exchange Commission (SEC) charged SafeMoon, its founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith with securities law violations. The SEC described the company's behavior as a massive fraudulent scheme, further deteriorating investor trust.

Effect on the Crypto Market

After the bankruptcy filing, SafeMoon's cryptocurrency saw a steep fall from $0.000065 to $0.000045 within a short span of five hours. Even though there was a brief recovery to $0.000061 within just 10 minutes, the damage had already been done. According to the latest update, SFM is trading at $0.00005729, marking a significant 98.2% decline from its peak value of $0.0033 on Jan. 5, 2022. Once boasting a market cap of $1 billion, it is now down to a mere $34.5 million.

Investor Dissatisfaction

Previous supporters of SafeMoon voiced their dissatisfaction on Reddit, with several claiming that they felt betrayed by the developers, stating that they were rug-pulled. They expressed their frustration and disappointment, accusing the SafeMoon developers of scamming everyone, including the moderators who supported and trusted SafeMoon.

Potential Future of SafeMoon

The rapid depreciation of SafeMoon's token value following the bankruptcy filing and numerous legal challenges have raised significant questions about the future of this once-distinguished decentralized finance protocol. The investor community, as well as the broader crypto community, are anxiously awaiting further developments as the repercussions of these events continue to resonate.

Edited by Jonathan Stoker