SafeMoon (SFM) Tanks 6% After $11M Liquidity Drain

SFM, the native token of the controversial decentralized finance (DeFi) protocol SafeMoon, has seen its price plummet by approximately 6% to $0.00003134 following a recent transaction that saw over $11 million worth of crypto assets removed as liquidity from various pools of the protocol.

$11M in Liquidity Drained

According to Cyvers Alerts monitoring, a deployer wallet recently added an address as an “approveLiquidityPartner” on Ethereum. 

🚨NEWS🚨Our system detected unusual transactions involving @safemoon.
The deployer added an address as an approveLiquidityPartner at https://t.co/ayFhE3fAgN, which then removed liquidity from various pools, transferring $11.2M to https://t.co/thIHUqF3uW on $ETH, $BNB and… pic.twitter.com/iJofry10sj

— 🚨 Cyvers Alerts 🚨 (@CyversAlerts) February 12, 2024

This address then removed liquidity from various pools, transferring approximately $11.2 million to an external wallet on the Ethereum, BNB Chain, and Polygon blockchains. On-chain data shows that crypto assets involved in these transactions include USDT, USDC, SHIB, LINK, WBTC, and PEPE. 

On-chain data also shows that this address holds $1.65 million in assets, including USDT, USDC, SHIB, LINK, WBTC, PEPE, and others.

Linked to SafeMoon Bankruptcy Case?

This development comes amid ongoing operational and financial challenges for SafeMoon. Last December, the project filed for Chapter 7 bankruptcy with the United States Bankruptcy Court for the District of Utah, allowing the liquidation of its assets to repay creditors.

The liquidity removal now raises the question of whether it is linked to or part of the protocol’s bankruptcy proceedings.

Earlier this year, SafeMoon management told users that it would be decommissioning the SafeMoon Wallet at the direction of its Chapter 7 trustee without providing a specific date for the action.

SafeMoon, however, noted at the time that it would send an “additional push notification and tweet with the exact decommission date and time in the near future.” 

Meanwhile, the exact nature of the liquidity drain and its potential connection to the bankruptcy case remains a subject of speculation as SafeMoon has yet to comment on the matter.

At the time of filing this report, SFM had recovered most of its losses and was trading at $0.00003266. This represents a mild decrease of 1.22% on the day.