A Squid Game token going by the ticker, ‘SQUID’, which was inspired by the popular Netflix hit series, surged more than 230,000% in the past week to trade as high as $2,861.80, according to coinmarketcap, is now worth less than half a cent as the token plunged 100%, losing its entire market capitalization.
The first sign of trouble came as Twitter flagged the supposed official account of the Squid Game token, GoGoSquidGame, and temporarily restricted it due to “suspicious activity”. The account had over 70,000 followers. After this account was restricted, the Squid Game token developers attempted running other accounts, which were also subsequently closed.
After, the token’s website and social accounts disappeared, along with the white paper of the platform. According to Gizmodo, the creators of the token have allegedly made off with an estimated $3.38 million, to what ended up being a classic rug pull event.
What you should know
The token was made available for purchase on 20 October with the idea that the cryptocurrency would be a pay-to-earn token, in which users will play an online game, inspired by Squid Game hit series in which heavily indebted people play deadly versions of children’s games to win cash.
According to the creators of the token, the game was set to launch in November and its promoters stated that winners would be rewarded with more SQUID tokens.
The cryptocurrency’s white paper was laden with grammatical errors, according to multiple reports and many analysts noted that the token could be fraudulent.
According to coinmarketcap, the SQUID token has a “self-reported” market capitalization of $2.8 million at the time of publication. It stated, “The CMC team has not verified the project’s Market Cap. However, according to the project, its self-reported CS is 720,121,920 SQUID with a self-reported market cap of $2,270,057.” The token’s fully diluted market cap is $2.6 million, down 100%.
The biggest red flag was that no one who purchased the coin was able to sell. SQUID token implemented a “anti-dumping technology,” which was preventing holders from selling the token.
PancakeSwap, a decentralized exchange was the only market for trading the SQUID token.
What they are saying
Antoni Trenchev, co-founder of crypto lender Nexo stated, “Betting on the right coin can lead to jaw-dropping riches. The problem is what goes up in a straight line tends to retreat in a similar fashion. You hear that some memecoin investors don’t care about the losses. They are in it for the ride but once the selling starts, a cascading effect can play out, so it’s wise to only use money you can afford to lose.”
Cornell University economist, Eswar Prasad told the BBC that, “Remarkably, many such coins rapidly catch investors’ fancy, leading to wildly inflated valuations. Naïve retail investors who get caught up in such speculative frenzies face the risk of substantial losses.”
Bobby Ong, a cofounder of CoinGecko, told Insider that, “The scam has completed its cycle, and the price has just dropped significantly. Website and social media accounts being deleted is a very obvious sign that it is a scam.”
Investors are always advised to DYOR, an acronym in the cryptocurrency world which stands for “Do Your Own Research”. These types of fraudulent projects happen all the time in the cryptocurrency world and we will see many more of its type.
Also, investors are advised to avoid projects with “anti-dumping technology,” because once you purchase the token, you will be unable to sell, irrespective of how the price appreciates.