Dave Portnoy Admits Major Misstep as SEC Charges SafeMoon Crypto Token With Fraud

In May 2021, Dave Portnoy announced he would invest in a new cryptocurrency. About a year prior to that, he hastily washed his hands off the Bitcoin he’d acquired. Ironically, a little later, the gains observed were significant. Portnoy missed a trick there. It might still haunt him, going by recent happenings.

With six choices in front of him, Dave Portnoy winnowed down his options to the one cryptocurrency in which he would invest following that initial debacle. In a video on X, he revealed the chosen one as SafeMoon. Portnoy admitted he had invested $40,000 in the same. At the time, he raised the possibility of the whole thing being a Ponzi scheme. That became much more than a possibility in due course.

Dave Portnoy puts his hands up after being affiliated with a Ponzi scheme

Most recently, Dave Portnoy took to X once more. He shared a clip from the same announcement video. In the part shared, he said, “Why? I don’t know f**g why. It could be a Ponzi scheme. I like the word ‘Moon’ because that’s where I want to go.“ Portnoy highlighted his choice was not backed by solid research. In the end, his suspicion of it being a Ponzi scheme was proved right. He added the words, “Turns out it was a Ponzi scheme after all. Hand up. Huge f**k up.” The US Securities and Exchange Commission (SEC) charged SafeMoon and its executives with fraud.

Dave Portnoy took up arms against SafeMoon long before the SEC charged it with fraud. According to the Coin Telegraph, his $40,000 investment devalued to fall to $2370.94 in 2022. He had not withdrawn a single token by that time. Portnoy added he was in the company’s firing line for trashing them on his show. Dave Portnoy admitted he made a mistake by investing in SafeMoon.

The charges leveled against SafeMoon and its executives

SafeMoon and its executives are being charged with “perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security,” as per FX Street. An audit performed in 2021 by blockchain security firm HashEx identified 12 contract vulnerabilities, according to the Coin Telegraph.

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A Ponzi scheme is “an investment fraud that pays existing investors with funds collected from new investors,” according to the SEC’s official website. One red flag they insist investors look for is if there are “guaranteed” high returns with minimal to no risk. They are known to claim the life savings of many every year. For instance, a lacrosse coach in Texas defrauded friends and family to the tune of a little over $2 million. He faced up to nine years in federal prison for the same.

The one lesson to take away from this incident should be to research properly before making any investment. The fine print, if read, could save investors from a great deal of future pain.

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