Key Takeaways
- SafeMoon LLC, the company behind the eponymous token, has filed for bankruptcy.
- For most SFM investors, the latest news marks the end of the road.
- With any prospect of a SafeMoon comeback all but dead, the bankruptcy highlights widespread resentment toward the company’s CEO.
- SafeMoon founder John Karony was recently arrested on fraud and money laundering charges.
Since its launch in 2021, SafeMoon (SFM) has taken investors on a rollercoaster. At its height, the token had a market capitalization of over $17 billion. But within 12 months of its market debut, SFM had crashed, and the company behind the ill-fated cryptocurrency has been mired in controversy ever since.
Amid allegations of fraud and weighed down by multiple lawsuits, on Thursday, December 14, the company behind SafeMoon filed for bankruptcy. As investors absorb the news, will the once-optimistic SFM community finally accept defeat?
SafeMoon Investors React to Bankruptcy
During its meteoric rise in the spring of 2021, SafeMoon’s influencer-driven marketing strategy appealed to a demographic that sits outside the traditional pool of crypto investors.
Thanks to the endorsement of celebrities like Lil Yachty and Jake Paul, social media helped fuel the token’s growth. As its audience grew, an active community of investors formed around the r/SafeMoon subreddit.
Since Thursday’s Chapter 7 bankruptcy filing, members of r/SafeMoon have been marking the end of an era. Summing up the general mood, one user put things succinctly: “It’s over.”
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byu/the_kapsule from discussion
inSafeMoon
Besides holders regret and nostalgia for good times, the other noteworthy theme to emerge from the subreddit is anger at SafeMoon’s founder John Karony.
SFM Token Developer Dogged by Legal Challenges
Throughout 2022, it became increasingly apparent that SFM was never going to revisit previous highs. This meant the community turned against Karony. Like many of the influencers he engaged to shill SFM, the company’s CEO cashed out his own holdings before the token hit rock bottom.
In May last year, a class action lawsuit named Karony and a string of celebrity SafeMoon endorsers as co-defendants. It accused them of profiting from a “slow rug pull” at the expense of investors. As more lawsuits followed, mounting litigation likely contributed to the company’s bankruptcy.
Things got even worse for the SafeMoon founder when he was arrested on fraud and money laundering charges this year. In another, civil, case, the Securities and Exchange Commission (SEC) charged him with misappropriating more than $200 million of investors’ funds.
Commenting on the Department of Justice’s charges against Karony and two other SafeMoon executives, United States Attorney Breon Peace said: “As alleged, the defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles.”
