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SafeMoon token has experienced a sudden drop after it was revealed that the company behind it has filed for bankruptcy.
In the past few days as the market started to rise, the risks of cryptocurrencies were once again made apparent.
The token for the decentralized financial protocol SafeMoon fell by 31% within five hours after the company behind it filed for bankruptcy.
SafeMoon officially filed for Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” with the United States Bankruptcy Office on December 14. The voluntary petition was submitted by attorney Mark Rose and Judge Joel Marker was assigned to the case.
A screenshot of a letter written by the head of the company’s restructuring to the staff emerged on Reddit. The company could not pay its employees’ salaries any longer.
The document stated, “You will have to sue in bankruptcy court for your unpaid wages.”.
The final blow came just a month after the SEC accused SafeMoon. Founders Kyle Nagy, CEO John Karony, and chief technology officer Thomas Smith were charged with violating securities laws in an event described by the regulatory body as a “major fraud scheme”.
How much did SafeMoon fall?
The SafeMoon token dropped from $0.000065 to $0.000045, five hours after the news on December 14, at 20:24. But it rebounded to $0.000061 in just 10 minutes.
According to Coinmarketcap data, SFM’s market value which was once $1 billion, is now $34.5 million.
Multiple former SafeMoon supporters expressed their disappointment with the bankruptcy on Reddit. They also claimed that they had been deceived by the developers of SafeMoon.
Reddit user u/Jtenka:
“The truth is, everyone who supported and trusted SafeMoon, including the mods, was deceived by the developers of SafeMoon.”
Another Reddit user, u/anonyamon42069, said:
“I don’t even want to talk about how badly we have been deceived and especially about the money I spent. I have a message for the idiots who still think SafeMoon still has a chance and ‘is going to the moon’: Get help!”.
Santiago Melgarejo, a former immutable token analyst and salesperson at SafeMoon, pointed out that most employees worked for free for a month and there were “red flags” when they were suddenly fired.
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