Safemoon Files for Bankruptcy
The decentralized finance (DeFi) project Safemoon has officially filed for Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” with the United States Bankruptcy Court in the District of Utah. The voluntary petition was filed by Attorney Mark Rose and signed by Chief Restructuring Officer Kenneth Ehrler.
Details of the Bankruptcy Filing
According to the filing on December 14th, Safemoon US LLC has projected assets ranging from $10 million to $50 million and estimated liabilities between $100,001 and $500,000.
Employee Letter and Lawsuit
A letter addressed to employees, allegedly written by the firm’s chief restructuring officer, emerged on Reddit. It explained that the inability to pay employee wages before the filing was due to the bankruptcy proceedings. The letter instructed employees to submit claims for their unpaid wages in the bankruptcy court. Additionally, a lawsuit filed in February 2022 accused celebrities and influencers of misleading investors into acquiring Safemoon tokens by falsely promising unrealistic profits.
SEC Accusations and Legal Proceedings
This bankruptcy comes just a month after the US Securities and Exchange Commission (SEC) accused Safemoon and its executives of violating securities laws. If found guilty, CEO John Karony could face a maximum prison sentence of 45 years. Karony and CTO Thomas Smith were taken into custody, while founder Kyle Nagy remains at large. Karony’s attempt to obtain temporary release was blocked by the prosecution. New York District Judge LaShann DeArcy Hall intervened to put a hold on bail approval, citing concerns about Karony’s potential flight risk.
Expert Warnings
Experts have advised caution to potential investors in light of these developments surrounding Safemoon.
Hot Take: Safemoon Faces Bankruptcy and Legal Troubles
Safemoon, a DeFi project that gained endorsements from celebrities and influencers, has filed for bankruptcy. This comes after a period of turmoil within the company and accusations of violating securities laws by the US Securities and Exchange Commission. The bankruptcy filing reveals the company’s assets and liabilities. Additionally, a lawsuit alleges that Safemoon misled investors. The legal proceedings have led to the arrest of some executives, while others remain at large. Experts warn potential investors to approach with caution. These recent events paint a challenging picture for Safemoon’s future.
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