SafeMoon’s decentralized finance protocol token (SFM) plummeted by 31% in just 5 hours after the company filed for bankruptcy protection.
SafeMoon officially filed for Chapter 7 bankruptcy protection on December 14 with the U.S. Bankruptcy Court in Utah. A screenshot of a letter allegedly written by the company’s restructuring director appeared on Reddit, explaining that bankruptcy was the reason why the company couldn’t pay employees before filing.
The document stated: “You will need to file a bankruptcy court claim for your unpaid wages.”
The bankruptcy comes just a month after the U.S. Securities and Exchange Commission (SEC) accused SafeMoon’s founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith in November of violating securities laws, describing it as a “massive fraud scheme.”
According to CoinGecko, the cryptocurrency dropped from $0.000065 USD on December 14 at 8:24 PM UTC to $0.000045 USD within 5 hours of the news. However, it quickly rebounded to $0.000061 USD within a short 10-minute timeframe.
SFM has dropped by 98.2% from its all-time high of $0.0033 USD on January 5, 2022, and its market capitalization, once at $1 billion USD, has now dwindled to $34.5 million USD.