In a surprising turn of events, the decentralized finance (DeFi) project Safemoon's SFM token has hit rock bottom following the company's recent bankruptcy filing.
SafeMoon has filed for Chapter 7 bankruptcy protection, with Attorney Mark Rose submitting the petition on behalf of the company at the United States Bankruptcy Court for the District of Utah.
The company has an estimated 50-99 creditors, with assets valued between $10,000,001 and $50 million and liabilities ranging from $100,001 to $500,000.
The bankruptcy protection document, signed by chief restructuring officer Kenneth Ehrler, sheds light on SafeMoon US LLC's estimated assets, ranging from $10 million to $50 million.
However, the firm is burdened by substantial liabilities, estimated to be between $100,001 and $500,000. Chapter 7 bankruptcy allows for the sale of a company's assets to repay outstanding debts to creditors.
Impact on Employees and Token Value
A letter circulating on social media, reportedly from the company's chief restructuring officer, implies that bankrupt SafeMoon employees must file claims for their unpaid wages as part of the bankruptcy proceedings.
Concurrently, the value of the SFM token experienced a significant drop to $0.00002875 but has partially rebounded to $0.00003, based on current data from CryptoSlate at the time of writing this.
These financial troubles come from allegations made by the U.S. Securities and Exchange Commission (SEC) against SafeMoon and its executive team.
The SEC accuses executives Kyle Nagy, John Karony, and Thomas Smith of engaging in deceptive practices, fraud, and the unregistered offering of crypto securities.
The executives allegedly deceived investors with false promises of profits and misused funds for personal gain, leading to their arrest.
Persistent Controversy and Market Decline
SafeMoon, originally a DeFi project aiming to provide investment opportunities and token burns, has faced enduring controversy throughout its journey.
This controversy has resulted in a significant decline in the value of its SFM token since its peak in March 2022.
The recent bankruptcy filing adds to a series of adverse events associated with the project, including allegations of wiping out market capitalization and misappropriation of funds.
SafeMoon's bankruptcy protection filing aligns with a broader crackdown on the cryptocurrency industry by the SEC, with major players like Binance being targeted.
The SEC's increased regulatory efforts reflect the need to regulate the crypto market. The U.S. Department of Justice has already apprehended CEO John Karony and CTO Thomas Smith for defrauding customers.
Before the bankruptcy filing and SEC allegations, SafeMoon faced numerous setbacks. In March, the project suffered an exploit, resulting in approximately $9 million in BNB losses from its liquidity pool.
Furthermore, YouTuber Coffeezilla has released multiple videos alleging misconduct and fraud involving SafeMoon's leadership in the past year.
SafeMoon's recent Chapter 7 bankruptcy filing has sent shockwaves through the DeFi community.
As the company navigates through legal proceedings, the once-promising DeFi project faces an uphill battle to restore trust and credibility amidst a backdrop of controversies.
The implications of this filing extend beyond SafeMoon, demonstrating the increasing scrutiny and regulation faced by crypto companies operating in today's innovation and challenges.