Decentralized finance (DeFi) project Safemoon’s SFM crashed to an all-time low after the firm behind it filed for bankruptcy on Dec . 14.
Attorney Mark Rose filed for a Chapter 7 bankruptcy on behalf of SafeMoon at the United States Bankruptcy Court for the District of Utah. The filing indicates that the firm has 50-99 creditors and assets between $10,000,001 and $50 million. SafeMoon has an estimated liabilities between $100,001 and $500,000.
Chapter 7 bankruptcy, also called “straight” or “liquidation” bankruptcy, permits the sale of a company’s assets to settle debts owed to creditors.
Simultaneously, a circulating letter purportedly from the firm’s chief restructuring officer on social media platform X (formerly Twitter) suggests that employees of the bankrupt company will need to file claims for their unpaid wages in the bankruptcy case.
Following the news, SFM’s value plunged to $0.00002875 but has slightly rebounded to $0.00003 as of press time, according to CryptoSlate’s data.
SafeMoon struggles
SafeMoon is a DeFi-oriented project that aims to provide investors with opportunities to earn interest on their investments through L.P. acquisition and token burns.
However, the project has faced persistent controversy, resulting in a significant decline in the value of its SFM token after peaking in March 2022.
Thus, this recent development adds to a string of adverse events linked to the project.
For context, the U.S. Securities and Exchange Commission (SEC) filed legal charges against SafeMoon and key leadership members in November. The regulator alleged they wiped out billions in market capitalization, withdrew crypto assets worth more than $200 million from the project, and misappropriated investor funds for personal use.
Subsequently, CEO John Karony and Chief Technology Officer Thomas Smith were apprehended by the U.S. Department of Justice for defrauding customers of millions of dollars.
Before these incidents, SafeMoon’s liquidity pool experienced an exploit, resulting in approximately $9 million in BNB losses in March. Additionally, YouTuber Coffeezilla released multiple videos in the past year alleging widespread misconduct and fraud involving the project’s leadership.
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