With Squid Game being one of the hottest shows on Netflix right now, SQUID, a new trending cryptocurrency named for the show capitalised off its popularity. However, on Monday, the token hit a high of just over $2,860 before plummeting to nearly zero as its unknown creators cleaned out around $3.3 million in funds.
This is termed a “rug pull”, where cryptocurrency token creators abandon the project and exchange virtual coins for actual cash. This drains the liquidity from the product and effectively drives the coin’s value to zero leaving other investors hung out to dry.
Marketed as a play to earn cryptocurrency, SQUID reportedly allowed buyers to partake in online versions of the games seen in the South Korean TV series (though Netflix has denied any affiliation with the cryptocurrency).
The token was launched last month and gained popularity right away, fueled in part by the hype around the eponymous TV show as well as the promotions on social media platforms like Twitter and Telegram. The value of the coin rose by more than 23 million per cent, from around just one cent to tapping out at $2861.80.
“This cryptocurrency joins a long and growing list of digital coins and tokens that piggyback on random memes or cultural phenomena,” Cornell University economist Eswar Prasad told the BBC. “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.”
Cryptocurrency Red Flags
Though its investors have lost millions collectively, according to many outlets there were several red flags that suggested the cryptocurrency wasn’t to be trusted. With a website filled with spelling and grammatical errors and their social media channels not supporting replies or comments, the biggest telltale sign was how no one who purchased the coin was able to sell.
Crypto expert, Louis Schoeman, Managing Director of Forex Suggest, cautions the public and advises how to avoid being the victim of a scam coin:
“While new coins appear every day, people should always be wary of buying a token with no history and never invest money you can’t afford to lose. While new coins can have all the bells and whistles and promise huge returns, if it sounds too good to be true, it most likely is.
“Scammers know how to appeal to people. They take trusted, recognisable names, like Squid Game, to piggyback off its global success and lure people into investing. They dupe people into believing there’s some kind of affiliation with real credentials, when really it is all a scam.
“To avoid being the victim of a crypto scam, look at the finer details and take your time to assess the token. Thoroughly read over the whitepaper to check for spelling and grammatical errors – does it look professional or quickly thrown together? If you copy and paste a chunk of the text and run it through a search engine you can easily see if it has been taken from another coin’s page which is a quick giveaway that something isn’t right. If you do some general research you should be able to assess how reputable a company is.
“Never send your money or cryptocurrency to a platform you don’t completely trust and only use an exchange you trust which doesn’t charge astronomical fees. If alarm bells start ringing then listen to your instinct and hold off. For instance, being unable to sell the coins you have bought should be an immediate red flag.
“It can be easy to see lots of people jumping on a new coin and want to get involved too, but make sure it is the right investment for you.”