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Summary
- Safemoon, a decentralised finance token, plunged today, losing two-thirds of its value in an hour.
- Safemoon was launched in March this year and has seen a meteoric rise since its inception.
- A number of sceptics are calling Safemoon a Ponzi scheme.
Cryptocurrency Safemoon has plunged today, losing two-thirds of its value in just an hour. The crypto dove from AU$0.000015 to AU$0.000005 on Thursday morning, later recovering to AU$0.000007.
The recent plunge has led to naysayers claiming that Safemoon is a scam.
What is Safemoon?
Safemoon’s initial success came on the back of a steep rise in several other cryptos, including Bitcoin and Dogecoin, the latter of which has risen a staggering 18,000% from a year ago, despite being started as a joke satirising other cryptos. In fact, Safemoon’s slogan, “Safely to the moon”, is based on a phrase made popular on the subreddit WallStreetBets, which attempted to hype up the price of Dogecoin.
Safemoon, which was launched on March 8, 2021, describes itself as decentralised finance (DeFi) startup, which means that it is available to anyone. Before its collapse, the crypto had jumped in value by an astounding 2,900%.
Source: © Photojk21| Megapixl.com
Unlike other cryptos, Safemoon penalises users 10 per cent to sell it while also claiming to reward those who hold on by redistributing five per cent of the cash gained from penalising those who sell.
On Thursday morning, CEO of Safemoon, John Karony, who on his LinkedIn profile describes himself as a ‘Video Game Enthusiast, addressed investors and followers on Twitch, announcing that Safemoon would soon be available on two more exchanges, one of which is Singapore based exchange, MXC. Currently, it is listed on three exchanges – WhiteBit, BitMart and PancakeSwap.
GOOD READ: Ethereum Hits Record High, Up 2x Against Bitcoin In 2021
SafeMoon Skepticism: Is it a Scam?
Despite its relatively steep rise since its recent launch, a number of crypto influences are saying that Safemoon is a ‘scam’, calling it a pyramid scheme where the people at the top - in this case, the people who bought early – get rich and the people at the bottom – those who buy in late – get robbed.
Source: © Shahurin| Megapixl.com
YouTuber and crypto influencer, Quinten François, called Safemoon a pyramid scheme that was growing faster than anything he had seen before.
This would not be the first cryptocurrency to pull this trick. In 2017, BitConnect abruptly closed its doors, following its own meteoric rise. The company claimed it would earn investors a high 40% return per month based on an initial deposit. Several people voiced concerns at the time that BitConnect was little more than a Ponzi scheme, and needless to say, they were correct.
The multilevel marketing tactics used by Safemoon – where a rising price depends solely upon more buyers – make it a very risky investment.
GOOD READ: Is A Sharp Dip In Bitcoin A Buy Call?
