The price of SafeMoon has dropped by over 36%, as investors’ hopes get dashed by a bankruptcy filing.
Less than a month after the United States Securities and Exchange Commission (SEC) filed a lawsuit against SafeMoon and its founders, the company has now voluntarily filed for Chapter 7 bankruptcy.
The latest development led to a substantial decline in the value of the SafeMoon token (SFM), with the asset dropping by 36% in the past 24 hours.
The bankruptcy filing appears to be the final nail in the coffin for a project that was once cheered on by many. At its peak, the project had a market cap of $1 billion and ranked within the top cryptocurrencies by market value.
However, SafeMoon’s uptrend was short-lived after circulating claims suggested that the project’s founders had deliberately defrauded investors.
The SEC alleged that the founders pulled out over $200 million from the project and wiped out billions in market value despite promising to take the project “safely to the moon.”
The project’s CEO, John Karony, and CTO, Thomas Smith, have since been apprehended by U.S. authorities, while lead creator Kyle Naggy remains at large. The bankruptcy, filed on Dec. 14, comes shortly after the charges.
End of the road for SafeMoon?
For any investor who may have nursed hopes of a SafeMoon recovery, the bankruptcy may represent breaking the last straw. A Chapter 7 bankruptcy is otherwise known as “liquidation bankruptcy” and focuses on liquidating remaining company assets to pay top creditors.
Companies that file for this form of bankruptcy are deemed to have fallen beyond the stage of reorganization (Chapter 11). A significant portion of accrued debts are discharged, while creditors cannot pursue legal action against the entities to recover the debt.
SafeMoon trades for $0.00004203 at the time of writing, representing a 36% decline in the past 24 hours. From its 2021 highs of $1 billion, the token now has just $23 million in market cap and almost no liquidity for holders to exit their positions.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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