Key Points
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SafeMoon has held up better than much of the rest of the crypto market in recent months.
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But SFM is nonetheless trading lower by around 85% versus earlier year highs.
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SafeMoon faces accusations of being a pump and dump scheme and its executives of siphoning funds, undermining investor trust.
SafeMoon has held up better than much of the rest of the cryptocurrency market in the past few months. While the total cryptocurrency market has lost around 50% of its market capitalization since the start of May, SafeMoon’s SFM token that runs on the Binance Smart Chain (BSC) is about 10% higher.
SFM currently trades just above $0.0005, around 30% higher versus earlier monthly lows in the $0.0004 area, though down around 35% from earlier monthly highs around $0.0008.
But recent outperformance masks a massive drawdown from earlier annual highs. After the SafeMoon developers released a new version of their token last December (SafeMoon V2), the new tokens shot to as high as $0.0032 in January, meaning the token has lost over 85% of its value since these highs.
At the January peak, SafeMoon V2’s market capitalization was nearly $2 billion, impressive stuff, but still nowhere near SafeMoon V1’s market cap from last May, shortly after the project’s initial launch.
What is SafeMoon?
SafeMoon is a self-proclaimed “DeFi” (which stands for Decentralised Finance) token that critics say offers no true utility to the crypto space, but employs incentives to encourage investors to hold onto their tokens. Each SafeMoon transaction is subject to a 10% “tax”.
SafeMoon says on its website that 4% of this tax goes towards redistributions back to all existing SafeMoon token holders. 3% is supposedly added to a liquidity pool. 2% of tokens are allegedly burned and 1% is added to SafeMoon’s Ecosystem Growth Fund.
The punitive tax on transactions, as well as the prospect of earning redistribution fees when others transact, encourages SafeMoon investors to HOLD.
What Next for SafeMoon?
Cryptocurrency market conditions are currently dire and this is weighing on SafeMoon just like the rest of the space. But when the macroeconomic backdrop improves over the next few quarters/years (I.e. inflation comes down, allowing central banks to revert to easy policy), most expect a powerful cryptocurrency market rebound.
Will SFM surge back towards record highs and onwards safely towards the moon?
Many think not.
SafeMoon faces widespread accusations of being an elaborate fraud/pump and dump scheme. SafeMoon’s price action since its launch in March 2021 (of both V1 and V2 of its token), with swift upwards swings followed by massive bearish corrections certainly has all the markings of a pump and dump scheme.
SafeMoon has also in the past employed a tactic popular amongst rug pull/pump and dump crypto scam artists – Paying big bucks to gullible social media influencers to shill the token. Various big-name celebrities including YouTubers Jake Paul and Ben Phillips, as well as rapper Lil Yachty, all pushed the project.
Last month, popular cryptocurrency scam hunter Coffeezilla released a series of videos on YouTube accusing the SafeMoon project of being an elaborate fraud. Not only was SafeMoon originally conceived of as a pump and dump scheme, Coffeezilla concluded, but the forced migration from the V1 token to the V2 token was linked to over $100 million in investor losses. Meanwhile, Coffeezilla accused SafeMoon executives of embezzling transaction tax funds that were supposed to have gone to the Liquidity Pool.
Separately, SafeMoon and a number of prominent social media stars who promoted are also facing a lawsuit. “The defendants’ intention behind the celebrity-driven marketing of the SafeMoon token was to eventually sell their holdings for a profit when numbers were high,” the lawsuit says.
Despite all of these accusations, SafeMoon does still have a robust community of supporters and believers. But sooner or later, SafeMoon’s developers are going to have to live up to their promise of being a “human-focused technology and innovation business expanding blockchain technologies for a brighter tomorrow”, or investors will continue heading for the exit.
This article was originally posted on FX Empire
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