$SQUID, a cryptocurrency token inspired by the South Korean Netflix series Squid Game, soared by 83,000 % before unexpectedly collapsing on Monday in an alleged rug pull scam with investors losing $3.4 million.
A crypto coin called $SQUID was released on October 26 by an organization that had no connections to the show’s producers, and it skyrocketed in popularity. SQUID tokens were originally worth $0.0 when they were first introduced.
The price began to increase significantly on November 1, but a so-called “anti-dumping mechanism” prevented investors from selling SQUID. According to Threatpost, all it took to keep investors from selling was a simple piece of code.
All the rules of how a token can be bought and sold are contained in the smart contract code itself, since these tokens are traded on a decentralized ‘automatic market-maker’ contract.
Basically, it just needs an extra line of code in the transfer function to prohibit the swap from occurring in the ‘sell’ direction unless the transaction sender is the address controlling the contract (i.e. the developer who removed all the liquidity from the pool and absconded).
According to CoinMarketCap, the cryptocurrency surged as high as $2,681 and dropped to $0 within hours, with scammers cashing out. According to CoinMarketCap, the cryptocurrency surged as high as $2,681 before plummeting to $0 in a matter of hours, with scammers cashing out.
The scam, which was first disclosed by Gizmodo, is known as a “rug pull,” and it occurs when the developers of a cryptocurrency suddenly exchange their coins for actual cash, depreciating the currency. The website puts the scam at an estimated $3.38 million.
SQUID had previously been advertised as a token for a new online game based on the popular dystopian Korean language series. The show follows participants in desperate financial situations as they compete in a brutal, deadly series of children’s games for a chance to win millions.
The Squid Game project, which was set to launch in November, was advertised to be a play-to-earn platform where participants could acquire more tokens that could then be traded for other bitcoins or national currencies.
Red Flags Everywhere
Despite a succession of red flags that indicated the cryptocurrency may not be completely legitimate, investors couldn’t resist and hurried to put their money into the new currency.
Gizmodo also called attention to several red flags amid the currency’s flood of notoriety, including:
- a three-week-old site containing poor spelling and grammatical mistakes that falsely claimed SQUID’s creators had partnered with Netflix and Microsoft (the website, hosted at SquidGame.cash, has since vanished, as has every other social media presence set up by the scammers);
- outsiders were not allowed to comment on SQUID’s Telegram channel, which was set up by unidentified scammers.
- no one could reply to posts on its Twitter page;
- no one who purchased the coin was able to sell it.
Molly Zuckerman, the head of content at CoinMarketCap, stated the cryptocurrency had “all the characteristics of a classic rug pull.”
I think that many investors probably weren’t aware of this mechanism, and panicked when they were unable to sell their tokens over the past week, not realizing that was something written into SQUID’s white paper.
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