The new cryptocurrency, SafeMoon, has been accelerating lately. However, many crypto enthusiasts are sounding the warning bells at what they are calling an obvious pyramid scheme. Most of CEO John Karony’s involvement, especially his financial stake in SafeMoon, is still undisclosed, which stokes the skepticism surrounding the DeFi currency.
According to Karony’s LinkedIn page, the crypto CEO spent over six years at the Department of Defense as an “All-Source Analyst.” Public data lists the salary of these positions in the upper five figures. One can all but guarantee that Karony’s net worth has increased significantly since he worked for the government.
Why John Karony's net worth matters
So, why are cryptocurrency zealots concerned about how much money Karony has made? The nature of digital currency has led many to believe something else is at play with the new cryptocurrency. When a SafeMoon token is sold, the owner of the token is assessed a 10 percent fee. Five percent is a burn rate, while the other five percent gets doled out to the rest of the SafeMoon holders. This discourages day-trading and helps the currency’s value, in theory.
Investors wonder if SafeMoon is a Ponzi scheme.
The backlash started after a Reddit Ask Me Anything that left users wondering if SafeMoon is a scam. In the online event, the crypto’s developers didn't answer users' questions with substantive answers. Instead, they filled the gaps with unrelated content.
A Twitter user going by the name "WarOnRugs" is speaking out against the token. The user claims that Karony has over 50 percent of the coin’s total liquidity. So, of the 5 percent that goes back to SafeMoon holders, half goes right into Karony’s pocket.
Also, if it’s true that Karony owns half of the SafeMoon stockpile, he could create a “rug pull” at any moment. This would leave SafeMoon holders left for dead with worthless currency.
What investors should do with their SafeMoon tokens
Investing is and always will be a personal decision. What one investor finds extremely risky, another sees as an opportunity to score a big win. With SafeMoon, the risk does seem a bit higher than other investment options.
Until more is done from the developers at SafeMoon to repair the PR hit it took after the Reddit AMA or clarify Karony’s positions, investors are justified in staying away.
However, for those who currently hold SafeMoon tokens, the decision can be a bit tougher to sort out. Remember, for each token sold, 10 percent is eaten up to the burn rate or given to the rest of the investors. If the gains outweigh the losses or the future risk is more than the initial cost, it could be a good opportunity to get out. Although cryptocurrencies are a new and volatile asset currently, there are many more stable and reputable digital currencies and blockchains out there.