Unknown entity drains $11.2m in liquidity via SafeMoon deployer contract

On-chain tracking alerts about unusual transactions worth $11.2 million related to a modified SafeMoon implementation contract, which coincided with the project’s bankruptcy proceedings.

According to an X post published by Cyvers Alerts, an unknown entity made changes to SafeMoon’s implementation contract, allowing significant liquidity to be extracted from multiple pools.

At the time of writing, the entity owns over $1.6 million in various tokens, including Wrapped BTC (wBTC), Tether (USDT) and Pepe (PEPE), with the remaining extracted liquidity transferred to Ethereum, BNB Chain and Polygon, according to facts from Etherscan.

Cyvers Alerts notes that the unusual movements started after the entity whitelisted an external address for recording purposes. It remains unclear whether these transfers are related to the ongoing SafeMoon bankruptcy case. At the time of writing, SafeMoon has not made any public statements on this matter. Amid the news, SafeMoon’s SFM token fell more than 8%, according to CoinMarketCap.

In mid-December 2023, SafeMoon initiated bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Utah. The bankruptcy filing came shortly after the U.S. Securities and Exchange Commission (SEC) leveled charges against SafeMoon and its key executives, founder Kyle Nagy, CEO John Karony and CTO Thomas Smith, for securities law violations.

According to the SEC, the trio carried out a “massive fraudulent scheme” that allegedly manipulated SafeMoon’s market cap to $5.7 billion through tactics such as wash trading, deceptive marketing strategies and misleading statements about liquidity lock timelines. While Karony and Smith have been arrested, Nagy remains at large.