Crypto Firm SafeMoon Files for Chapter 7 Bankruptcy, SFM Plunges 42%
The firm's executives were arrested last month on multiple charges.
Crypto company SafeMoon filed for Chapter 7 bankruptcy on Thursday, as its executives face criminal charges in the U.S.
SafeMoon, which is affiliated with a token by the same name, said it has between 50 and 99 creditors, anywhere between $10 million and $50 million in assets, and owes between $100,000 and $500,000, according to a filing in the Utah Bankruptcy Court.
Chapter 7 bankruptcies result in a debtor’s assets being liquidated to repay creditors. Unlike the Chapter 11 bankruptcies other crypto companies have filed under, there’s usually no intent to restructure and relaunch the company.
SafeMoon’s executives were arrested last month by U.S. officials on charges of securities fraud conspiracy, wire fraud conspiracy and money laundering conspiracy tied to allegations that CEO John Karony, CTO Thomas Smith and creator Kyle Nagy misappropriated millions in investor assets and lied to customers. However, Nagy was charged but has not been arrested yet.
The firm also faces a Securities and Exchange Commission (SEC) lawsuit alleging fraud and securities law violations.
SafeMoon’s SFM tanked some 42% over the past 24 hours, though it also does not have a lot of liquidity or a particularly large market capitalization.
Edited by Parikshit Mishra.
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