In a recent development, cryptocurrency company Safemoon has initiated voluntary Chapter 7 bankruptcy proceedings in the District of Utah, as stated in its bankruptcy documents. The move follows the company’s founders being indicted last month on charges of securities fraud, wire fraud and money laundering by the U.S. Securities and Exchange Commission and the Department of Justice.
Safemoon US File Chapter 7; SFM token plummets
On December 14, 2023, Safemoon US, LLC, the corporation that operates the safemoon.com website, filed a Chapter 7 bankruptcy petition in Utah. This type of bankruptcy, often called a “liquidation,” requires the debtor’s non-exempt assets to be sold to settle debts with creditors.
For companies like Safemoon, Chapter 7 bankruptcy means ceasing all operations, and a court-appointed trustee manages the sale of the company’s assets to repay creditors. Safemoon has assets worth between $10 million and $50 million against liabilities ranging from $100,000 to $500,000, according to the bankruptcy filing approved by the chief restructuring officer.
Founded on March 1, 2021 by CEO John Karony with assistance from Kyle Nagy and Thomas Smith, Safemoon launched its native token Safemoon (SFM) to the market in late December 2021. On January 5, 2022, SFM reached its peak. The value is $0.00338272. The token’s current value is down 98.7% from its all-time high nearly two years ago.
But confusion arose last month when the SEC and the Department of Justice (DOJ) for the Eastern District of New York charged Safemoon with fraud and misappropriation of millions of dollars. The DOJ accused the founders of excessively spending investor funds on purchasing luxury vehicles, real estate and other luxuries.
After the bankruptcy declaration, SFM’s value fell to an all-time low and continued its downward trend. When asked in the Chapter 7 document whether the debtor owns or holds any property that requires immediate attention, the restructuring officer affirmed, “Yes.” The assets classified as ‘other’ were listed as including ‘cryptocurrency, intellectual property rights, and other intangible assets.’
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Source: Bitcoin.com