After being accused of fraud by the U.S. Securities and Exchange Commission (SEC) last month, SafeMoon, a decentralized finance protocol, has sought protection under Chapter 7 bankruptcy. The filing was made to the United States Bankruptcy Court in the District of Utah on Thursday.
The bankruptcy document, signed by chief restructuring officer Kenneth Ehrler, discloses that SafeMoon US LLC’s assets are estimated to be between $10 million to $50 million. However, the company also faces substantial liabilities valued at $100,001 to $500,000. This financial crisis follows the SEC’s charges against SafeMoon and its executive team, alleging fraud and the unregistered offering of crypto securities.
The SEC claims that SafeMoon’s executives, Kyle Nagy, John Karony, and Thomas Smith, were involved in deceitful practices, failing to fulfill promises of profits and misappropriating investor funds for personal benefit. As a result, Karony and Smith were arrested, while Nagy remains at large. Prosecutors have accused the defendants of misleading investors about the accessibility of SafeMoon’s ‘locked’ liquidity and their personal trading activities, allegedly diverting millions of dollars for their own use.
SafeMoon’s market position has suffered as a result of the bankruptcy protection filing. Currently, the SafeMoon token, SFM, has experienced a significant 44% drop in the past 24 hours, according to CoinGecko data.
This bankruptcy filing comes at a time when the SEC is intensifying its scrutiny of the crypto industry, particularly focusing on major players such as Binance, the world’s largest crypto exchange. The SEC’s ongoing efforts reflect an increasing push to regulate and oversee the rapidly evolving cryptocurrency market.
