Table of Contents:

· SafeMoon executives arrested for securities fraud, telecom fraud, and money laundering to obtain millions of dollars

· "The first dog king of the three chains" SFM myth is no longer, the token price has dropped by about 97% from its highest point

· SafeMoon was previously hacked, resulting in a loss of about $8.9 million

November 2nd, the US Attorney's Office for the Eastern District of New York announced that Braden John Karony, Kyle Nagy, and Thomas Smith, the founders and executives of SafeMoon, a DeFi protocol in the BNB Chain ecosystem, were sued for alleged investor fraud.

Meanwhile, on the same day, the SEC filed charges against SafeMoon and several executives for conducting a large-scale fraudulent scheme using unregistered cryptocurrency assets. The SEC alleges that the defendants promised to take the token price "safely to the moon," but instead of bringing profits, they caused a loss of billions of dollars in market value, extracted over $200 million worth of cryptocurrency assets from the project, and misappropriated investor funds for personal use.

From the former "King of the Three Chains" to the current fall from grace, what has SafeMoon experienced?

SafeMoon executives arrested for securities fraud, telecommunications fraud, and money laundering to obtain millions of dollars

It is reported that the charges brought in this lawsuit include securities fraud, telecommunications fraud, and money laundering. According to the allegations, the defendant deceived investors in the decentralized financial digital asset called "SafeMoon" (SFM token) released by his company SafeMoon LLC, illegally transferred and misappropriated millions of dollars of "locked" SFM token liquidity funds, and used them for personal gain, including purchasing luxury cars, real estate, and personal investments.

According to official documents, Karony is currently arrested in Provo, Utah, and Smith is arrested in Bethlehem, New Hampshire. Nagy is still at large. It is worth noting that Karony was still promoting SafeMoon on social media before his arrest.

More detailed information shows that the defendant distorted various important aspects of SFM's issuance to investors, including SFM's reliance on "locked" liquidity pools, retaining access to the SFM liquidity pool, and intentionally transferring and misappropriating tokens worth millions of dollars from the SFM liquidity pool for personal gain.

In addition, although they publicly deny holding or trading SFM, the defendants have repeatedly bought and sold SFM for personal gain, including buying and selling at the highest SFM market prices, resulting in millions of dollars in profits. The defendants have used a large number of private non-custodial cryptocurrency wallet addresses, complex transaction routing, and pseudonymous centralized trading accounts to conceal the flow of their fraudulent profits.

The defendant used a portion of the proceeds to purchase luxury cars and real estate in New Hampshire, Utah, and Florida. For example, Smith used his controlled cryptocurrency address to send 2,900 BNB to a third-party cryptocurrency address, worth over approximately $860,000, traceable to the SFM liquidity pool, to purchase a customized Porsche 911 sports car, among others.

Token price drops by about 97% from its all-time high, "The First Dog King of Three Chains" SFM Myth is no more

The SFM token was first issued on the public chain in March 2021. The former SFM, due to its "perfect contract function with increasing liquidity", was once regarded as the "king of the three chains".

The SFM token will automatically charge a 10% tax on each transaction. For example, if a holder of SFM transfers 10 SFM to another user, 1 SFM will automatically be withheld as tax, and the remaining 9 SFM will be received by the other party. In addition, the revenue from the SFM 10% tax is divided into two parts, each part being 5%.

The first 5% of tax revenue will be "reflected" back and distributed to all SFM holders in proportion to the SFM they currently hold, thereby automatically increasing the total amount of SFM held by each SFM investor; the remaining 5% will be stored in the designated SFM liquidity pool. The larger the SFM liquidity pool, the greater the liquidity of the SFM market.

Related reading: "Continue Capital Analysis: The Investment Logic Behind DOGE's Rise and the Billion-Dollar SafeMoon"

SafeMoon charges a 10% transaction fee, with 5% directly added to the liquidity pool, achieving "self-growth of liquidity". Moon burns 40% of the tokens, and due to the 5% dividend function, 2% of the fee is actually burned directly, resulting in continuous burning and deflation of Moon.

Within a few months of its launch in March 2021, the number of SFM holders exceeded one million and its market value exceeded 8 billion US dollars. However, after the public learned on April 20, 2021 that SafeMoon's liquidity pool was not locked as claimed, its price plummeted by nearly 50%. Since then, SFM has lost its former glory.

According to CoinGecko data, the price of SFM token has dropped by 97% from its all-time high. At the same time, it has fallen by 53.4% in the past 24 hours, possibly due to the impact of executive arrests. The once legendary token has become history.

Behind this, in addition to the influence of the overall environment, the attacks on SafeMoon have also to some extent accelerated the collapse of its myth.

SafeMoon previously suffered a hacker attack, resulting in approximately $8.9 million in losses

BlockBeats Previously reported, on March 29th this year, SafeMoon was hacked, resulting in a loss of about $8.9 million in its liquidity pool. According to Peckshield, a "public destruction vulnerability" was introduced into SafeMoon's update, allowing hackers to artificially increase the price of SFM using code functions, and then sell enough tokens back to the liquidity pool in the same transaction, thereby withdrawing WBNB from the contract.

Afterwards, the attacker sent a message on-chain to the SafeMoon team expressing their willingness to communicate and return the funds. Subsequently, they returned 80% of the stolen funds as promised. SafeMoon CEO Karony also stated that they have fixed the vulnerability, but it was not enough to reverse SFM's downward trend.

Many users pointed out in the comments that "three years have passed and you still haven't produced anything useful." This is also one of the reasons why the SafeMoon myth is no longer valid to some extent.

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