Lawsuit filed against Safemoon promoters for pump and dump strategy

A new class-action lawsuit has been filed against social influencers and celebrities promoting the safemoon cryptocurrency. The lawsuit revolves around a pump and dump strategy.

Safemoon pump and dump

Safemoon (SAFEMOON/USD) is a cryptocurrency developed on Binance Smart Chain. The token was promoted by some of the most popular celebrities involved in ads to lure investors. Some of the celebrities now entangled in this lawsuit include Soulja Boy, Nick Carter and Lil Yachty. YouTubers such as Ben Philips and Jake Paul have also been mentioned.

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The lawsuit says that the aforementioned celebrities and influencers lured investors by promising them high returns. The promotions referred to Safemoon’s burn process as a key factor that would drive future price gains.

The lawsuit also shows that following these promotions, the price of Safemoon had spiked, and the trading volumes had increased significantly. The token recorded notable gains for a few months, after which the price started a downtrend. This was when the token’s executives left the project as the prices continued to fall further.

The lawsuit shows that the token’s price movement was a rug pull involving the celebrities. The promoters started selling off their holdings while retail investors remained invested.

The lawsuit has been tabled by Bill Merewhuader, Christopher Polite and Tim Viane, the plaintiffs. The three wants Safemoon investors who bought the token on March 8, 2021, to be compensated following the rug pull.

The lawsuit read,

The Promoter Defendants’ improper promotional activities generated the trading volume needed for all the Defendants to offload their SAFEMOON Tokens onto unsuspecting investors. 

There has been intense debate over the promotions surrounding cryptocurrencies. Last year, Floki Inu published its ad on London’s public transport system, but the ad was brought down by authorities who said that it increased risks to naïve investors.

Recently, the US Super Bowl event was marked with many cryptocurrency ads. Some of the leading crypto firms such as FTX, Coinbase and Crypto.com joined in this craze. However, it sparked debate, with the chief of the Senate Banking Committee saying that the firms were promoting crypto because it wasno0t real money.