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The token of decentralized finance protocol SafeMoon (SFM) has fallen 31% in five hours after the company filed for bankruptcy.

Safemoon officially applied for Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” in a Dec. 14 filing to the United States Bankruptcy Court in the District of Utah. The voluntary petition was filed by attorney Mark Rose, with Chief Judge Joel T. Marker assigned to the case.

Today’s bankruptcy filings in the U.S. Bankruptcy Court District of Utah. Source: U.S. government

A screenshot of a letter to employees purportedly written by the firm’s chief restructuring officer surfaced on Reddit, explaining that its bankruptcy run was why it was no longer able to pay employee wages prior to the filing.

“You will need to file a claim in the bankruptcy court for your unpaid wages,” the document read.

The latest blow comes only a month after the United States securities regulator charged SafeMoon, its founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith in November for violating securities laws in what the regulator described as “a massive fraudulent scheme.”

The cryptocurrency fell from $0.000065 on Dec. 14 at 8:24pm UTC to $0.000045 over a five-hour period after the news, according to CoinGecko. It did, however rebounded back to $0.000061 in a rapid-fire 10 minute span.

SMF fell 31% immediately following the bankruptcy filing before regaining slightly. SFM is currently changing hands for $0.00005729. The token is down 98.2% from its highest price of $0.0033 on Jan. 5, 2022, and its once $1 billion market cap has now tumbled to $34.5 million.

SFM’s change in price over the last 24 hours. Source: CoinGecko

Several former SafeMoon supporters expressed frustration on Reddit in reflection of the bankruptcy, alleging they were rug-pulled by the SafeMoon developers.

“The fact of the matter is, everyone has been scammed by the SafeMoon developers, including the mods that supported and trusted SafeMoon,” said Reddit user Jtenka.

Another Reddit user, “anonyamon42069,” said: “Never wanna even talk about how bad we all got scammed and especially the money I lost. To the idiots that still think SafeMoon has a chance and will ‘go to the moon’: seek help.”

Related: SafeMoon hacker’s use of centralized exchanges could help law enforcement — Match Systems

Santiago Melgarejo, a former nonfungible token analyst and sales specialist for SafeMoon, said in reflection that the “warning signs were there” all along, notably when many of the employees were abruptly fired despite many of them working a month without pay.

SafeMoon was also exploited in March, resulting in a net loss of $8.9 million.

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