In the latest alleged cryptocurrency schemes, rappers Soulja Boy and Lil Yachty, along with boxer Jake Paul, are facing a lawsuit over their supposed involvement in a “pump and dump” ordeal.
The whole ordeal is said to be beneficial to SafeMoon founder and CEO Braden John Karony, according to Complex. While Karony was named, the suit says that other top-level executives are said to have also benefited from the scheme.
Business Strategy Gone Wrong
As previously reported by AfroTech, celebrities or public figures are often used to lure people into purchasing certain cryptocurrency tokens. However, when they get behind the products, it often misleads consumers into thinking that the products are more valuable than they appear.
In this case, endorsements made by the previously mentioned stars did cause the value of the tokens to increase. And if you recall, AfroTech previously explained that this is a “slow rug pull” tactic.
Check out our story on “junk crypto,” and what you need to do to protect yourself against the prevalent scam here.
The SafeMoon token was launched in March 2021 under the catchphrase “‘safely to the moon,’ as if to suggest that this latest entry in the cryptocurrency game would reach new heights in a ‘safe’ manner,” Complex reports.
While the stars associated with claims of helping to run up SafeMoon investor numbers did succeed. On the flip side, the company hipped them to “token burns,” which meant removing a certain number of tokens from circulation.
In the end, investors were allegedly tricked into believing that this particular method would increase the value of their tokens – it did not.
By December 2021, the value of SafeMoon tokens took a significant plunge and have struggled to remain afloat ever since.
“On Dec. 31, 2021, the price of the SafeMoon Token hit a low of $0.0000006521 per token, an over 80 percent drop from its height during the Class Period, which it has not been able to recover,” reads the reports within the lawsuit. “As of the filing of this Complaint, the trading volume for the SafeMoon Token has plummeted to around only $60,000.”
Marketing for the SafeMoon tokens included social media ads, however, the company took it a step further and launched a billboard in Time Square to continue its ploy to build up the value of its token. Instead, over time, the volume of its trading plummeted.
Despite the fact that the value of the tokens steadily dropped, SafeMoon managed to save face with a failed effort to restore strength to its value with the “imminent” arrival of the wallet.
Rather than witnessing a successful wallet launch, investors watched closely as those once fully invested top executives of SafeMoon began to step down.
First up was Hank Wyatt, who resigned from his position as chief technology officer and even sold his tokens to investors who had no clue that the company’s wallet was in the middle of a failing launch, Complex reports.
According to the suit, Wyatt “knew or should have known” that the wallet would indeed fail.
Following Wyatt’s resignation, in fact only one day after, Jack Haines Davies also left his position which in turn made the tokens go “from a close of $0.000000153 on Sept. 9, 2021, to the low for the day of $0.00000119 on Sept. 10, 2021.”
A host of other executives at the company left “under similar circumstances.”
Further details on how the lawsuit will affect the celebrity names involved have yet to be revealed.