It's easy to get caught up in the hype of cryptocurrencies. You see news that the Shiba Inu coin's value spiked 960% in a single month and wonder what could have been if only you knew. Unfortunately, cryptocurrency trading often results in far more losers than winners.
The latest example comes courtesy of a cryptocurrency attempting to profit around the hype surrounding the TV show Squid Game. On Oct. 26 a coin called $SQUID was launched by a group with no affiliation to the creators of the hit Netflix show — the first red flag. As memecoins sometimes do, it exploded in growth. After listing at 12 cents, on early Monday morning it briefly hit a peak of $2,800.
Then, as memecoins are also known for doing, it all crashed. In an instant, the price fell to one third of one cent.
It appears that $SQUID was a scam all along. In what's known in crypto circles as a “rug pull”, the creators drained all the project's funds and then vanished, aided by the anonymity that crypto wallets afford. The Squid Game coin's website and Medium account disappeared — though you can see an archived version of the site here — and its Twitter was pulled due to “suspicious activity”.
Bitcoin and Ether are the two biggest cryptocurrencies in the world, but below them is a sea of “altcoins”. These are to cryptocurrency what penny stocks are to blue chips, and range from legitimate projects that aim to provide decentralized finance services to simple “memecoins”, like Dogecoin, which are essentially bought and sold off community hype. Though there are real cryptocurrencies with teams of developers behind them, there are many, many more scams.
The Squid Game coin featured all the hallmarks of a crypto scam, as Gizmodo helpfully pointed out last week. Among the many red flags was one giant, flashing alarm: the project's contract locked investors liquidity for a certain time period. In other words, once you buy, you can't sell. This “feature” was written in the whitepaper, described as an “anti-dump” protocol that would assure healthy price growth.
Since many altcoins explode and crash within a few hours, traders often invest in these projects with reckless abandon, hoping to jump in, profit and jump back out all in a short period of time. Scammers sometimes take advantage of this with the aforementioned “anti-dump” liquidity locking.
The Squid Game token was meant to be tied into a “play-to-earn” online game, in which coin holders would pay to play a game based on the Netflix hit where, ironically, the winner would take all. The developers behind the game gave investors an update on the coin's Telegram group:
“Squid Game Dev does not want to continue running the project as we are depressed from the scammers and is overwhelmed with stress.”
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