Decentralized finance (DeFi) protocol SafeMoon has taken the unexpected step of filing for Chapter 7 bankruptcy protection in response to recent Securities and Exchange Commission (SEC) accusations and executive arrests.
SafeMoon Files for Chapter 7 Bankruptcy Following Executive Arrest and SEC Charges
The voluntary bankruptcy petition was filed in the United States Bankruptcy Court for the District of Utah, and Chief Restructuring Officer Kenneth Ehrler approved the document.
According to the filing, SafeMoon US LLC, the organization behind the DeFi protocol, has estimated assets between $10 million and $50 million, with estimated liabilities ranging from $100,001 to $500,000.
The move follows legal action taken by the SEC against SafeMoon and its executive team the previous month. The SEC had accused the firm of alleged fraud and unregistered crypto securities offering.
The regulator accused SafeMoon's directors, Kyle Nagy, John Karony and Thomas Smith, of failing to deliver on promised profits and misusing investor funds for personal use.
While John Karony and Thomas Smith were arrested last month, Kyle Nagy remained free. “As the market value of SFM increased to over $8 billion, the defendants fraudulently diverted and embezzled millions of dollars worth of so-called ‘locked’ SFM liquidity for their personal benefit,” the SEC said.
*This is not investment advice.
