SafeMoon: 6 things to know about the new cryptocurrency
NEW cryptocurrency SafeMoon has gained popularity in recent days, but there are a number of things you need to be aware of.
SafeMoon has surged in value after launching on March 8 this year.
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Its founders are based in various cities across the US, but so far very little is known about the new cryptocurrency.
Buying cryptocurrencies and decentralised finance tokens as well as stocks and shares is a risky business.
Investing is not a guaranteed way to make money, so make sure you know the risks and can afford to lose the money.
Cryptocurrencies and decentralised finance tokens are also highly volatile, so your cash can go down as well as up in the blink of an eye.
Below we round up six things to know about SafeMoon.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
1. SafeMoon is a decentralised finance token
SafeMoon technically isn't a cryptocurrency but a DeFi token, according to its website.
DeFi stands for decentralised finance token.
They are very complex but essentially aim to disrupt the finance world to enable people to follow and lend in peer-to-peer networks, without needing a bank.
Like Bitcoin they use a complicated method called blockchain technology.
2. Its value has rocketed since launch
The value of SafeMoon is currently up by more than 32% in the past 24 hours, according to CoinMarketCap.
However, SafeMoon recorded an even higher 99% rise on Sunday after Bitcoin had its biggest single day drop for months.
The value of SafeMoon is currently sitting at $0.000008, compared to $0.0000000011 on March 11.
3. But beware: it's similar to a pyramid selling scheme
SafeMoon claims it will reward people who buy and hold onto the cryptocurrency.
While those who sell the currency will be slapped with a penalty.
Its Facebook page states: "Remember, getting to the moon takes time and the longer you hold the more tokens you pick up."
This is known as multi-level marketing or a pyramid selling scheme.
Experts warn that these can sometimes be a sign of a scam and make it a very high risk investment.
Laith Khalaf, financial analyst at investment platform AJ Bell, told The Sun that although long-term investment is encouraged, SafeMoon "doesn't sound too different from a pyramid selling scheme".
He added: "You’re simply reliant on someone further down the line being willing to pay more than you did to turn a profit, which is a risky bet indeed.
"I’d suggest investors steer clear, at least until a bit more is known about SafeMoon."
How to spot crypto scams
CRYPTO scams are popping up all over the internet. We explain how to spot them.
- Promises of a high or guaranteed return – Does the offer look realistic? Scammers often attract money by making fake promises.
- Heavy marketing and promotional offers – If they are using marketing tricks to con customers you should beware.
- Unamed or non-existent team members – Just like any business you should be easily able to find out who is running it.
- Check the whitepaper – Every crypto firm should have a white paper. This should explain how it plans to grow and make money. If this doesn't make sense, then it could be because the founders are trying to confuse you.
- Do your research – Check reviews online and Reddit threads to see what other people think.
4. Its name is a play on the words 'Safely to the Moon'
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, also said SafeMoon's name alone "should ring alarm bells".
She said: "Its name appears to be a play on the words ‘Safely to the Moon', which has been one of the calls to action employed by Reddit traders in an attempt to push up the price of rival Dogecoin."
Dogecoin's price increased 91% in 24 hours last week after Elon Musk tweeted about it – and it has increased 20,000% from this time last year.
The SafeMoon website also promises a trajectory of growth for the DeFi token, but this is far from guaranteed, Ms Streeter added.
5. Investing is risky and you could lose it all
Investing is essentially gambling and there are no guarantees that you will see what you pay in go up in value.
Cryptocurrencies are VERY high risk and a speculative investment, with limited track records and no underlying value.
There is also no guarantee that you can convert crypto assests back into cash, as it may depend on the demand and supply in the existing market.
You should never invest in something you don't understand.
6. Unknown if SafeMoon is legit
It is unclear if Safemoon is legit. Very little is known about it and this could mean that your money is at higher risk.
SafeMoon's US founders have been holding "Ask Me Anything" sessions to reassure investors.
Yet cryptocurrency firms aren't regulated in the way that other financial firms are, meaning you won't have any protection if things go wrong.
You won’t be able to take a complaint to the Financial Ombudsman Service, for example.
Investing is always a risk but investing in cryptocurrency is an even higher risk as they are VERY volatile.
UK crypto asset businesses must register with the Financial Conduct Authority – and you can check to see if they are on the Financial Services Register or if they are on a list of firms with temporary registration.
There is also a list of businesses not registered. If they are on this list then they may be operating illegally.
Even if they are on the list the city watchdog is not responsible for regulating them and they don't have any power over how they conduct business with customers.
Essentially it is very hard to tell which firms are real and which ones are scammers.
Currently SafeCoin is listed on the BitMart exchange but not on the major leading platforms Coinbase or Binance.
In January, the Financial Conduct Authority warned that Brits risk losing ALL of their money if they invest in cryptocurrencies.
Meanwhile, an advert for a bitcoin exchange Coinfloor was banned last month for telling savers cryptocurrencies are a safe investment.
People considering investing in Bitcoin or shares and stocks have also been warned over "risky" tips being shared on TikTok.
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