Cryptocurrency project SafeMoon has filed for bankruptcy protection in Utah bankruptcy court。With assets between $10 million and $50 million and debts between $100,000 and $500,000, the bankruptcy filing reveals the company's dire financial situation.。

Prior to this, SafeMoon's executive and CEO John Karony, Chief Technology Officer Thomas Smith and founder Kyle Nagy were also recently arrested.。The arrests took place last month and relate to charges of securities fraud conspiracy, wire fraud conspiracy and money laundering conspiracy.。In addition, the executives face charges of embezzling investor assets and defrauding customers.。

The aftermath of the bankruptcy filing reportedly affected SafeMoon's market performance, with the value of SFM tokens plummeting 42% in 24 hours.。

SEC charges and fraud allegations

Last month, the U.S. Securities and Exchange Commission (SEC) filed charges against Nagy, Karony and Smith for alleged fraudulent schemes related to SFM's unregistered sales.。The allegations reportedly uncovered more than $200 million in embezzlement.。

SEC charges describe fraudulent activity by SafeMoon team to reassure investors that their assets are safe。However, an undisclosed portion of SafeMoon's liquidity pool was unlocked, resulting in funds being diverted for private use.。

David Hirsch, head of the crypto assets and networks group in the SEC's enforcement division, said: "Decentralized finance claims to provide transparency and predictable results, but unregistered products lack the disclosure and accountability required by law, and they attract scammers like Kyle Magy, who exploit these loopholes to enrich themselves at the expense of others.。"

SafeMoon's Price Soars, Crashes, and Alleged Manipulation

In early 2021, SFM's price reportedly rose exponentially, reaching a staggering $5.7 billion market cap.。However, after the discovery of an unlocked pool of liquidity, prices fell by nearly 50%, a flash in the pan。

After the crash, Karony and Smith were accused of trying to artificially inflate the price of SFM, according to the SEC.。In addition, the two executives have been accused of market manipulation and reshuffling。At the same time, the U.S. Department of Justice has filed a lawsuit against the founder of SafeMoon.。

In March, a network upgrade by SafeMoon introduced a vulnerability that endangered its liquidity pool.。This security breach resulted in the loss of approximately $8.9 million worth of SFM tokens。According to Cointelegraph, this vulnerability allows tokens to be burned from different addresses.。

PeckShield, a blockchain investigative agency, uncovered the issue, saying attackers manipulated SafeMoon's tokens to make them soar in value and then sell them at inflated prices.。