A new cryptocurrency called Safemoon is indeed mooning — thanks in part to a spate of glowing articles in the mainstream press — but many influential members of the crypto community in Australia and overseas are calling out what they are saying is an obvious pyramid scheme.

The value of the decentralised finance token on Wednesday has grown nearly 12-fold in the past week — and people who bought in at launch just five weeks ago were sitting on a mind-boggling 200x gain. (Late last night it began paring back its gains, however.)

‘This is a scam’

However while the Safemoon website uses plenty of technical jargon to describe its utility, a number of crypto influencers call it a get-rich-quick scheme with no real purpose other than to enrich early adopters.

While most cryptocurrencies try to minimise transaction fees to encourage real-world adoption, Safemoon charges sellers a hefty 10 to 12 per cent penalty to withdraw their funds. Half of that is burned (destroyed), and the other half is redistributed to existing tokenholders, encouraging them to hold onto the coins.

“I’m pretty convinced this is a pyramid scheme and that you will lose your money if you get in right now, because this is a scam that is growing faster than everything I have ever seen before,” Dutch YouTuber Quinten François said in a video posted on Wednesday.

“I know a lot of people will hate me for this, but I’m already five and a half years in crypto… I know what scams are and what are not.”

François said he was one of the first in the crypto community to warn against Bitconnect, a cryptocurrency pyramid scheme that surged in value during the last bull run in 2017 before eventually collapsing in January 2018.

Australian Facebook group Crypto Paradox, which has over 32,000 members, yesterday warned that anyone trying to promote Safemoon would be instantly banned as it was a scam.

Kiwi crypto influencer Lark Davis, who has over 200,000 followers on Twitter, issued his own warning.

Credulous news coverage

Despite the crypto community’s scepticism over the token, a number of mainstream news publications have published uncritical articles about it in recent days.

Alex Saunders, the Tasmanian host of the popular digital news channel Nuggets News, called out one such article.

A number of Safemoon hodlers seem aware it is a pyramid scheme but say there’s still money to be made in it.

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Update 21/5/2021: This post has been updated to remove a quote from the War on Rugs Twitter account. Read this story for the reasons why.

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