The cryptocurrency project SafeMoon has filed for
bankruptcy protection in Utah Bankruptcy Court. With assets ranging between $10
million to $50 million and debts between $100,000 to $500,000, this bankruptcy
filing has unveiled a dire financial situation in the company.
This step followed the recent arrest of SafeMoon’s
executives, John Karony, the Chief Executive Officer; Thomas Smith, the Chief
Technology Officer; and the Founder, Kyle Nagy.
These arrests, which were made last month, involved charges related to securities fraud conspiracy, wire fraud conspiracy, and
money laundering conspiracy. Additionally, the executives face allegations of
misappropriating investors’ assets and deceiving customers.
The aftermath of the bankruptcy filing affected SafeMoon‘s market
performance, witnessing a staggering 42% plunge in the value of SFM tokens within
24 hours, Coindesk reported.
Last month, the US Securities and Exchange
Commission (SEC) charged Nagy, Karony, and Smith, citing a
purported fraudulent scheme related to the unregistered sale of SFM. These accusations revealed misappropriation exceeding $200 million, Finance Magnates
reported.
The SEC’s accusations depicted fraudulent activities
by SafeMoon’s team, assuring investors the safety of their assets. However, an
undisclosed portion of SafeMoon’s liquidity pool was unlocked, allowing for the diversion of funds for personal use.
Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.
— U.S. Securities and Exchange Commission (@SECGov) November 1, 2023
David Hirsch, the Chief of the SEC Enforcement
Division’s Crypto Assets and Cyber Unit, mentioned: “Decentralized finance
claims to deliver transparency and predictable outcomes, but unregistered
offerings lack the disclosures and accountability that the law demands, and
they attract scammers like Kyle Nagy, who use these vulnerabilities to enrich
themselves at the expense of others.”
SafeMoon’s Price Surge, Crash, and Alleged
Manipulation
The exponential rise in the price of SFM in early
2021 reportedly propelled its market capitalization to a staggering $5.7
billion. However, this upsurge was short-lived after the discovery of
the unlocked liquidity pool, triggering a decline in price by almost 50%.
According to the SEC, the aftermath of this crash
witnessed alleged attempts by Karony and Smith to artificially prop up SFM’s
price. Besides that, the executives are accused of market manipulation and wash
trading. Simultaneously, the US Department of Justice has
initiated lawsuits against SafeMoon’s Founders.
In March, a network upgrade by SafeMoon introduced a bug, compromising its liquidity pool. This security breach resulted in the loss of approximately $8.9 million worth of SFM tokens. This was reportedly caused by a vulnerability that allowed the burning of tokens from different addresses, Cointelegraph reported.
To the @SAFEMOON community: We want to inform you that our LP has been compromised.
We are taking swift action in an attempt to resolve the issue as soon as possible. Follow here for updates.
Thank you for your support as we work to address this situation.
— SafeMoon (@safemoon) March 28, 2023
Blockchain investigator PeckShield identified this issue, alleging that attackers manipulated SafeMoon’s tokens, spiking their value and then selling them at an inflated price.
The cryptocurrency project SafeMoon has filed for
bankruptcy protection in Utah Bankruptcy Court. With assets ranging between $10
million to $50 million and debts between $100,000 to $500,000, this bankruptcy
filing has unveiled a dire financial situation in the company.
This step followed the recent arrest of SafeMoon’s
executives, John Karony, the Chief Executive Officer; Thomas Smith, the Chief
Technology Officer; and the Founder, Kyle Nagy.
These arrests, which were made last month, involved charges related to securities fraud conspiracy, wire fraud conspiracy, and
money laundering conspiracy. Additionally, the executives face allegations of
misappropriating investors’ assets and deceiving customers.
The aftermath of the bankruptcy filing affected SafeMoon‘s market
performance, witnessing a staggering 42% plunge in the value of SFM tokens within
24 hours, Coindesk reported.
Last month, the US Securities and Exchange
Commission (SEC) charged Nagy, Karony, and Smith, citing a
purported fraudulent scheme related to the unregistered sale of SFM. These accusations revealed misappropriation exceeding $200 million, Finance Magnates
reported.
The SEC’s accusations depicted fraudulent activities
by SafeMoon’s team, assuring investors the safety of their assets. However, an
undisclosed portion of SafeMoon’s liquidity pool was unlocked, allowing for the diversion of funds for personal use.
Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.
— U.S. Securities and Exchange Commission (@SECGov) November 1, 2023
David Hirsch, the Chief of the SEC Enforcement
Division’s Crypto Assets and Cyber Unit, mentioned: “Decentralized finance
claims to deliver transparency and predictable outcomes, but unregistered
offerings lack the disclosures and accountability that the law demands, and
they attract scammers like Kyle Nagy, who use these vulnerabilities to enrich
themselves at the expense of others.”
SafeMoon’s Price Surge, Crash, and Alleged
Manipulation
The exponential rise in the price of SFM in early
2021 reportedly propelled its market capitalization to a staggering $5.7
billion. However, this upsurge was short-lived after the discovery of
the unlocked liquidity pool, triggering a decline in price by almost 50%.
According to the SEC, the aftermath of this crash
witnessed alleged attempts by Karony and Smith to artificially prop up SFM’s
price. Besides that, the executives are accused of market manipulation and wash
trading. Simultaneously, the US Department of Justice has
initiated lawsuits against SafeMoon’s Founders.
In March, a network upgrade by SafeMoon introduced a bug, compromising its liquidity pool. This security breach resulted in the loss of approximately $8.9 million worth of SFM tokens. This was reportedly caused by a vulnerability that allowed the burning of tokens from different addresses, Cointelegraph reported.
To the @SAFEMOON community: We want to inform you that our LP has been compromised.
We are taking swift action in an attempt to resolve the issue as soon as possible. Follow here for updates.
Thank you for your support as we work to address this situation.
— SafeMoon (@safemoon) March 28, 2023
Blockchain investigator PeckShield identified this issue, alleging that attackers manipulated SafeMoon’s tokens, spiking their value and then selling them at an inflated price.
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- Source: https://www.financemagnates.com//cryptocurrency/safemoon-unravels-files-for-bankruptcy-amid-executives-arrests/
