The once-thriving memecoin, SafeMoon (SFM), has opted for Chapter 7 bankruptcy in the United States. This form of bankruptcy primarily focuses on settling creditors by liquidating a debtor’s assets.
In response to a recent regulatory action taken by the U.S. Securities and Exchange Commission (SEC), a strategic choice was made to liquidate assets.
— BSCN (@BSCNews) December 15, 2023
Following allegations by the SEC, three SafeMoon executives—founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith—have been accused of employing deceptive business tactics to artificially inflate SafeMoon’s market valuation to an astonishing $5.7 billion.
Over $200M Funds Misappropriation By Management Team
The SEC claims that the management team misappropriated $200 million for personal use, which included the purchase of luxury cars and real estate. Wash trading, misleading marketing tactics, and false statements regarding liquidity lock-up timescales are among the detailed allegations in the SEC complaint. While Karony and Smith were apprehended following arrests last month, Nagy remains at large.
SafeMoon has initiated bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Utah, aiming for a discharge of debts and the retention of exempt properties.
Just hours after the bankruptcy filing, the associated token of SafeMoon witnessed a sharp 30% decline.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any service.