SafeMoon: How an $8 Billion Token Ended in Bankruptcy

In the spring of 2021 a token called SafeMoon went from nothing to one of the most valuable crypto assets in the world in about six weeks. The Securities and Exchange Commission later calculated that its price rose more than 55,000% between 12 March and 20 April 2021. The Justice Department put its peak market value, the price of one token multiplied by every token in circulation, at more than $8 billion, with millions of holders.

On 16 October 2026 the same token was changing hands for about $0.00000077, according to the price tracker CoinGecko, and every SafeMoon token in existence was worth less than half a million dollars. About $4,500 of it traded that day. The company behind it is in Chapter 7 bankruptcy, the American form of liquidation in which a trustee sells off what is left. Its chief executive has been convicted of fraud. What remains for the people who bought is a class-action settlement worth an estimated $12 million, due before a judge in Salt Lake City on 22 October 2026.

The mania

SafeMoon was a token, a digital chip recorded on a blockchain (a shared public ledger), launched in March 2021 on Binance Smart Chain, a network run alongside the Binance exchange. It had no company profits behind it and no product at launch. What it had was a fee. Every buy or sell paid 10%: half was shared out among existing holders, the other half went into the trading pool that lets people buy and sell instantly. The more others traded, the more holders received, a little like a share that pays a dividend funded by other people's brokerage fees. Selling cost 10%, so holding looked like the safe choice. The name did the rest: "to the moon" is the crypto phrase for a price that only goes up.

It spread on TikTok, YouTube and Reddit. YouTubers and musicians posted about it, among them Jake Paul and Daniel "Keemstar" Keem, and the self-styled "SafeMoon Army" defended it against critics. The token was so cheap per unit that a few hundred dollars bought tens of millions of them, which made a rise of one hundredth of a cent feel like a fortune.

The first crack came early. On 20 April 2021 it emerged that the trading pool, which the team said was locked away where no insider could touch it, was not fully locked, and the price fell by nearly half in a day, according to the SEC. How the people running SafeMoon used that unlocked money, and how its chief executive ended up in prison for it, is told in the Rug Pull Museum.

A long decline

SafeMoon spent the next two years trying to become a business. The company released a SafeMoon wallet app in the autumn of 2021 and announced plans for an exchange and projects as far away as The Gambia. In December 2021 it moved to a new version of the token, SafeMoon V2, and consolidated every 1,000 old tokens into one, the same thing a company does in a reverse stock split. Holders had to move their tokens over themselves.

None of it stopped the slide. Crypto prices fell across the board in 2022, and in April that year the YouTube investigator Stephen Findeisen, known as Coffeezilla, published videos alleging that insiders had been taking money from the pool. Two investor lawsuits were filed in 2022, one of them naming the company and the celebrities who had promoted it.

Then, on 28 March 2023, SafeMoon was hacked. An upgrade to its code, which the security firm CertiK said had not been audited, left open a "burn" function, a command that destroys tokens and is meant to be usable only by the team. Anyone could call it. The attacker used it to destroy SafeMoon tokens sitting in the trading pool, which pushed the price inside the pool sharply up, and then sold tokens back into it for about $8.9 million in BNB, the Binance network's own currency. It was like being able to burn the shares in a market maker's inventory, then selling him your own at the new, inflated price. In April the attacker agreed to return 80% and keep the rest as a so-called bounty, and SafeMoon promised not to pursue legal action. About $7.2 million came back on 20 April 2023.

Charges and bankruptcy

On 1 November 2023 the Justice Department and the SEC charged the creator Kyle Nagy, chief executive Braden John Karony and technology chief Thomas Smith with fraud. Six weeks later, on 14 December 2023, SafeMoon US LLC filed for Chapter 7 bankruptcy in Utah, and Ellen Ostrow was appointed trustee. In April 2024 the trustee agreed to sell SafeMoon's brand, wallet and trading software to the VGX Foundation, an outside group that took over the name.

Karony was convicted on all counts in May 2025 and sentenced to 100 months in February 2026. Smith pleaded guilty. Nagy is believed to be in Russia.

What holders have now

The new owners tried to restart the token. In February 2025 VGX burned 2.2 trillion SafeMoon tokens across the Ethereum, Polygon and Binance Smart Chain networks and offered holders a swap into a new SafeMoon memecoin, a joke-style token with no business behind it, on the Solana network, saying it would let people "get out of their positions". At that point the old token was worth about $41 million, CoinDesk reported, and had been dropped by almost every exchange. By October 2026 it was worth less than one hundredth of that.

The realistic route to getting anything back runs through the courts. In Combs v. SafeMoon LLC, a class action first filed in February 2022 and now before Judge David Barlow of the US District Court for the District of Utah, three settlements were provisionally approved on 22 June 2026, over an objection from Karony: an estimated $12 million in cash from the bankruptcy estate, $200,000 from Jake Paul and $90,000 from Keem. After lawyers' fees, the papers estimate about $10 million in the main fund. It covers people who bought SafeMoon between 8 March 2021 and 1 November 2023, and pays in proportion to each claimant's loss. Claims are due by 9 November 2026. Spread across a token that once had millions of holders, the money will go a short way.

Separately, the trustee is suing Nagy, Karony, Smith, members of Karony's family and promoters including Jake Paul and Ben Phillips for at least $100 million, a claim that has not been tested. Any money recovered goes into the bankruptcy estate first.