On December 14, SafeMoon officially filed for Chapter 7 bankruptcy protection at the United States Bankruptcy Court in the District of Utah. The voluntary petition was submitted by attorney Mark Rose, with Chief Judge Joel T. Marker assigned to oversee the case. Following the announcement, SafeMoon (SFM) experienced a sharp decline of over 50% at the time of writing. The memecoin is down 98.11% from its highs in January 2022.
A letter allegedly written by the firm’s chief restructuring officer surfaced on Reddit, explaining that the bankruptcy filing was the reason behind the company’s inability to pay employee wages. The document advised employees to file a claim with the bankruptcy court for their unpaid wages.
This recent blow comes just one month after SafeMoon, its founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith were charged by the U.S. Securities and Exchange Commission (SEC) for violating securities laws. The regulator described the company’s operations as a “massive fraudulent scheme.” The U.S. Department of Justice (DOJ) has also revealed an indictment against SafeMoon creator Kyle Nagy, CEO John Karony, and CTO Thomas Smith, charging them with conspiracy to commit securities fraud, wire fraud, and money laundering.
Numerous former supporters of SafeMoon expressed frustration on Reddit, alleging that they were deceived by the company’s developers. Some users claimed to have suffered financial losses and urged others to seek help and avoid further investment. Former employees also raised concerns, noting sudden terminations despite working for a month without pay.
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