A class action complaint has been filed against SafeMoon executives as well as a host of celebrity promoters, but what is the case really all about?
The suit which was filed on Feb 17 alleges that the case ‘arises from a scheme among various individuals in the cryptocurrency sector to misleadingly promote and sell the digital asset associated with SafeMoon to unsuspecting investors.’
The suit also adds that SafeMoon executives in cahoots with celebrity promoters, ‘made false or misleading statements to investors about SafeMoon,’ and that ultimately the plaintiffs suffered damages because of this.
Who is involved in the SafeMoon case?
The named plaintiffs who are bringing the action against SafeMoon are Bill Merewhuader, Christopher Polite, and Tim Viane, ‘individually and on behalf of all others similarly situated.’ The first two men reside in California, while Viane is a resident of Illinois.
Not a huge amount of detail is currently known about the lead plaintiffs.
Public records do show that a man named Bill Merewhuader has previously filed a number of unsuccessful lawsuits against individuals and companies in LA county. A person of the same name also requested that they be included in a successful 2013 class-action lawsuit brought against Google for privacy violations. If it proves that all these cases involve the same man, Bill Merewhuader would appear to be a somewhat litigious individual.
The ‘executive defendants’ of the suit are CEO Braden John Karony, COO Jack Haines-Davies, Global Head of Products Ryan Arriaga as well as staff members Shaun Witriol and Henry Wyatt.
The ‘promoter defendants’ or celebrity defendants are named as follows, YouTuber and professional nuisance Jake Paul, British YouTuber Ben Phillips, former Backstreet Boy Nick Carter, and the rappers Souja Boy and Lil Yachty. Additionally, SafeMoon LLC and its subsidiaries are also named.
Seven reasons why
As presented by the plaintiffs the case against SafeMoon is as follows:
- The plaintiffs argue that SafeMoon presented their tokenomics to investors in a misleading fashion. The misrepresentation of SafeMoon tokenomics included not only the reflection aspect of the token, but the burning aspect of the token too, creating a false impression of eventual token scarcity.
- The SafeMoon team used celebrity endorsements to ‘inflate market demand’ creating the necessary pump required for team insiders to dump huge numbers of tokens on ordinary investors.
- The celebrity defendants were compensated in SafeMoon tokens and joined executive defendants in dumping tokens on ordinary investors.
- On April 4, 2021, the company published the SafeMoon roadmap to its official Instagram channel. As part of that roadmap the company promised to complete the SafeMoon wallet by the end of Q2 of that year, to create an NFT exchange by the end of Q3, and deliver a SafeMoon exchange by Q4.
- SafeMoon did not come close to delivering on these promises and many more additional promises listed on their roadmap and elsewhere. SafeMoon repeatedly engaged in the practice of over-promising and under-delivering.
- That SafeMoon hired Ryan Arriaga for the primary purpose of discrediting legitimate concerns about the project. This included attacking an audit conducted by the firm HashEx, rebutting their audit in ‘Hashex Safemoon Audit DEBUNKED,’ on June 2, 2021.
- The SafeMoon team hyped up the launch of the SafeMoon wallet, promising to deliver at 4PM on August 28th. Despite this promise key team members knew that the wallet stood no chance of launching on time. On August 30th Company CEO John Karony released a statement saying he was as much in the dark as ordinary investors: “No reasons for an unsuccessful launch were bought [sic] to my attention prior to 4PM [of August 28th].” The plaintiffs claim that the SafeMoon team were dishonest in this regard and continued with the charade of the SafeMoon wallet launch primarily for the purpose of pumping the token value.
The above is only a summary of the most pertinent points; the full legal document lists over 150 separate points of argument or evidence.
Nobody is telling John Karony to worry
On receiving the lawsuit, SafeMoon CEO John Karony (aka Cpt. Hodl) was keen to inform the SafeMoon community that the legal case is absolutely nothing to be concerned about. To back this claim, Karony has stated that nobody on SafeMoon’s legal team has told him to feel concerned.
By his own admission, however, the CEO has not always been well informed about issues of concern in the past, such as the time when nobody at the company thought to tell Karony that the SafeMoon wallet wouldn’t launch on time. The lesson may be that sometimes the CEOs of large companies need to proactively ask questions rather than passively assuming that no news means good news.
Ice-cool Karony went on to add that legal action was totally normal for large and well-known companies and told the community that SafeMoon ‘have an amazing legal team.’ This seems to have reassured some members of the community, but not everyone is convinced.
SafeMoon community mixed reaction
While a number of community members have been quick to defend the project, the lawsuit seems to have provided a catalyst for some long-standing community grievances to come bubbling to the surface.
On the company Discord server one fed-up user, xElias, cites the high turnover of SafeMoon staff and the company’s inability to deliver on its promises as ongoing issues for concern.
“So… did the old team have the qualifications or does the new team have the qualifications? Last time I checked John was CEO back then just as he is now, so [he is the] only one person to blame for poor human resource decisions. This excuse is getting old. He is overpromising and underdelivering again and again.”
On the other side of the fence, much of the community views the lawsuit as nothing more than the latest baseless attack in a long line of unfair criticisms.
“I would not worry to [sic] much about it,” said community-member Splinter. “Because even if Safemoon found the cure to cancer, there will be a bunch of folks who would do their utmost to somehow make it the worst thing in the world.”
Whoever has the right or wrong of the matter, it will be interesting to see how the case unfolds and whether the involved parties ever see the inside of a courtroom.
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