The cryptocurrency startup SafeMoon recently filed for Chapter 7 bankruptcy due to criminal charges against its executives in the United States.
According to a filing in the Utah Bankruptcy Court, SafeMoon, which is connected to a token of the same name, has between 50 and 99 creditors, assets ranging from $10 million to $50 million, and debts ranging from $100,000 to $500,000.
Assets of a debtor are liquidated in Chapter 7 bankruptcies in order to pay creditors. In contrast to the Chapter 11 bankruptcies that other cryptocurrency businesses have filed for, there is typically no intention of restructuring and relaunching the business.
In response to claims that CEO John Karony, CTO Thomas Smith, and creator Kyle Nagy misappropriated millions of dollars in investor assets and deceived customers, SafeMoon’s executives were detained by US authorities last month on conspiracy charges related to securities fraud, wire fraud, and money laundering. Nevertheless, Nagy was charged but hasn’t yet been taken into custody. In addition, the Securities and Exchange Commission (SEC) has filed a lawsuit against the company, claiming breaches of securities laws and fraud.
In the last day, SafeMoon’s SFM fell about 42%, despite the fact that it has a relatively small market capitalization and little liquidity.