Blockchain firm SafeMoon is filing for bankruptcy after its founder and two executives were indicted on fraud charges in November.
According to a recent document, the crypto company voluntarily filed for Chapter 7 bankruptcy over a month after founder Kyle Nagy, chief technology officer Thomas Smith and chief executive Braden Karony were accused of violating securities laws.
In November, Karony and Smith were arrested for allegedly defrauding investors by falsely claiming that assets held in SafeMoon’s liquidity pools could not be withdrawn by anyone. However, all three had the ability to withdraw funds from these pools. At the time, Nagy was still at large.
According to the Department of Justice (DOJ), the trio used $200 million worth of their clients’ funds to enrich themselves and pay for expensive items, such as real estate and custom-made luxury vehicles.
The DOJ has charged the executives with conspiracy to commit wire fraud, conspiracy to commit money laundering and conspiracy to commit securities fraud.
Furthermore, the U.S. 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 sales of their native digital asset, SFM.
“Defendants promised to take the price of the token ‘Safely to the moon,’ but instead of delivering profits, they wiped out billions in market capitalization, withdrew crypto assets worth more than $200 million from the project, and misappropriated investor funds for personal use.”
News of the bankruptcy had an impact on the price of SFM, which is trading for $0.000042 at time of writing, a 34.28% decrease during the last 24 hours.
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