Crypto Watchers Find SafeMoon To Be Suspicious Due To Unusual Characteristics
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SafeMoon is a bit of an oddball in a sense that one will be charged a 10% fee to buy or sell the token.
Half of the fees is used as an incentive to encourage owners to keep holding, while the other goes into a liquidity pool operated by the developers.
SafeMoon dubs itself as a DeFi token, which uses decentralized finance to govern functions via software. However, it has a CEO and COO.
Crypto watchers that find SafeMoon to be suspicious are also concerned about the discretionary nature of the manual coin burns used to adjust its circulations.
It is for these reasons — as well as some other red flags — that people find the crypto asset to be suspicious.
The manual burns, alongside the company having a pretty large stake in the coins, just speaks to me of a manipulation risk. Whenever there’s some sort of mechanism to stop selling, that’s a bit of a warning sign.
Jasper Lawler, Head of Research at London Capital Group
Barstool Sports Inc. founder Dave Portnoy was not deterred by the red flags, despite saying that SafeMoon could be a Ponzi scheme. In fact, Portnoy revealed that he has purchased $40,000 worth of SafeMoon on Twitter. The price of SafeMoon increased by 18% within an hour after. Whether or not Portnoy still owns SafeMoon remains a mystery for now.
Senior research analyst at Messari Inc., Jack Purdy, is unsure about the risk surrounding SafeMoon. All he knows is that SafeMoon is designed for investors to buy and hold in order to earn passive rewards via “static reflection”. Purdy stated that SafeMoon is different in a way that it is “not trying to hide the fact that’s how the system works.”
SafeMoon CEO John Karony denied the allegations that the token is a Ponzi scheme, saying that he has placed everything — identity, credibility and all — on the line for SafeMoon.
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