Blockchain company SafeMoon has filed for bankruptcy after its founder and two executives were indicted on fraud charges in November.
According to a recent filing, the crypto company voluntarily filed for bankruptcy more than a month after founder Kyle Nagy, chief technology officer Thomas Smith and CEO Braden Karony were accused of violating securities laws.
In November, Karony and Smith were arrested for allegedly defrauding investors by falsely claiming that assets in SafeMoon’s liquidity pools could not be withdrawn by anyone. However, all three had the ability to withdraw money from these pools. Nagy was still at large at the time.
According to the Department of Justice (DOJ), the trio used $200 million of their clients’ money to enrich themselves and pay for expensive items such as real estate and custom luxury vehicles.
The DOJ has charged the executives with conspiracy to commit bank fraud, conspiracy to commit money laundering and conspiracy to commit securities fraud.
Furthermore, the US Securities and Exchange Commission (SEC) has also filed a lawsuit against the trio, accusing them of masterminding a massive crypto fraud scheme through the unregistered sale of their proprietary digital asset, SFM.
“Defendants promised to take the price of the ‘Safe to the Moon’ token, but instead of making a profit, they wiped out billions in market cap, extracted crypto assets worth over $200 million from the project, and embezzled investor funds for personal use.”
News of the bankruptcy impacted SFM’s price, which at the time of writing is trading at $0.000042, down 34.28% over the past 24 hours.
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Generated image: Midjourney