SafeMoon Cryptocurrency “Pump and Dump” Class Action

The prospects for individuals cryptocurrencies are difficult for individuals to evaluate before they buy. The defendants in this class action brings are SafeMoon, LLC, related other SafeMoon companies, and two groups of individuals (the Executive Defendants and the Promoter Defendants), all connected to the SafeMoon token. The complaint alleges that these defendants used “misleading promotions and celebrity endorsements … to increase the interest in and price of” the SafeMoon cryptocurrency in order to get investors to buy it at inflated prices.

The class for this action is all persons who, between March 8, 2021 and February 17, 2022.

SafeMoon was created as a BEP-20 token using the Binance Smart Chain mainnet blockchain. Its name comes from the phrase “Safely to the Moon.” According to the complaint, “On March 8, 2021, the Executive Defendants launched the SafeMoon Tokens with a transaction volume of $149,427 and a price of $0.0000000004…”

It was launched with a whitepaper entitled, “SafeMoon: A Deflationary Reflection Token with Automated Liquidity Acquisition.” The currency claimed to “burn” portions of its supply of tokens, in order to lead to scarcity.

The complaint quotes extensively from an article entitled, “FBI ties and Ponzi games—here’s what SafeMoon doesn’t want you to know.”

For example, it quotes the article as saying, “What SafeMoon claims to do differently is distribute what it calls ‘static rewards’ to its now 2 million holders. Static rewards push to alleviate downward sell pressure from eariluer adopters, who are inclined to dump their tokens once yield falls. SafeMoon’s static rewards are, more or less, a system that penalizes buyers for anything but holding their tokens. Anyone that sends SafeMoon to another wallet is ‘charged’ a 10% fee—half is burned and the rest given to other holders.”

The article says, “SafeMoon embodies meme token hype better than almost any crypto in history. … But what SafeMoon resembles most is the crypto-powered Ponzi games once poular on Ethereum…” It adds, “These games … are designed to mimic real-life Ponzi schemes. And so, just like the Ethereum-based Ponzi games that came before it—the earliest to buy SafeMoon hypothetically stands to make the most profit—but only if they can lure enough players to follow suit.”

The complaint is built around two detailed sections, entitled, “The Pump—Defendants Lure Investors in with Misleading Promotions,” and “The Dump—SafeMoon Token Price Plummets[.]”

“The Pump…” describes the promotion of SafeMoon, including its use of celebrities to advertise it. SafeMoon rose to a maximum price of $0.000011, which the complaint says “represents a rise of approximately 2,749,900% more than its initial launch price…” “The Dump…” describes its fall, with an over 80% drop from its highest point during the class period.

The complaint alleges that the defendants made false or misleading statements to investors and also hid their control over SafeMoon and the tokens available for trading.

Article Type: Lawsuit
Topic: Investments
Tags: Cryptocurrency, Investment Losses, Investments, Pump and Dump Scheme