Lessons that can be learned from the Squid Game token scam.
A digital token piggybacking on the Netflix-hit dystopian series Squid Game has lost all its value after being revealed to be an apparent scam.
Developers had created an online version of the game as featured in the viral TV show, which tells the story of a group of poor people being forced to play a series of deadly children’s games for millions in prize money.
Players had to buy the Squid Game cryptocurrency, SQUID, in order to join each round of the play-to-earn game, which would get more expensive as they went along. Participation in the game cost 456 SQUID, a nod to the show’s 456 players.
After launching at a price of US$0.01, the value of SQUID increased exponentially and hit US$4.42 only three days later.
Criticisms that the tokens were hard to resell have been ignored by the creators.
On November 1, the price of SQUID jumped to an incredible US$2,862.
However, minutes later, the anonymous developers suddenly rug-pulled, stopped any trading activity and made off with an estimated US$3.38 million. At that point, SQUID lost all of its value—its price plunged 99%, and it was worth only a mere US$0.0007926.
Currently, the website for the Squid Game token is no longer available and all of its related social media accounts have been scrubbed off the Internet.
This serves as a good reminder that investors should always have their eyes wide open and pay attention to any warning signs before dumping their assets for a quick profit. A lot of digital coins that capitalize on popular culture and entertainment often attract the attention of investors, which could lead to uncontrolled and inflated valuations. Apart from SQUID, another example would be the Mando coin, which exploited the excitement and hype surrounding the popular Disney+ series Mandalorian. Mando was found to be a fraud shortly after its release, costing big losses for the 17-year-old TikTok influencer, who promoted the coin, as well as his followers.
One warning sign lies in how SQUID’s price surged so rapidly. The spectacular ascend in SQUID’s value was spurred on by the anti-dumping mechanism of the token, which prevents people from selling their coins. Basically, players couldn’t sell their tokens until they won one of the games and acquired “marbles”. As the online game wasn’t launched at the time, no one could actually play and win marbles, which meant it was possible for players to sell their coins.
Another sign that shouldn’t have been ignored is the number of spelling and grammatical errors found on the token’s website.
With no regulatory oversight, it’s very easy for crypto developers and promoters to exploit naive buyers who are caught in popular trends and speculative frenzies. Investors should always keep their eyes open to avoid investing in suspicious schemes and facing inevitable losses down the line.
Header image courtesy of Unsplash