Squid Game cryptocurrency turns out to be a scam
The creators of the crypto token, Squid Game, have sold off their majority holdings, tanking the value of the currency and rendering it virtually worthless to small investors who have ploughed millions into it since its launch two weeks ago.
Squid Game launched on 20 October and was initially worth just over 1 US cent. Its value soared to $2,800 yesterday, prompting its anonymous creators to sell off their holdings, shut down the website squidgame.cash, and disappear.
According to cryptocurrency price-tracking website CoinMarketCap, the token’s founders have done something called a “rug pull” or “rug scam”.
A statement on the Squid Game page of CoinMarketCap said: “We have received multiple reports that the website and socials are no longer functional & users are not able to sell this token in Pancakeswap. There is growing evidence that this project has rugged. Please do your own due diligence and exercise extreme caution. This project, while clearly inspired by the Netflix show of the same name, is NOT affiliated with the official IP.”
According to tech website Mashable, a rug pull is when the developers behind a new coin pump it as quickly as possible with the intent to immediately cash in their large holdings. With no more liquidity, the crypto falls in value and everyone else’s investment becomes worthless. The developers basically run off with investors’ money.
Squid Game isn’t the first rug pull that’s been executed – there were a large number of social media influencer-promoted crypto scams that took place during the summer. However, the Squid Game cryptocurrency generated a lot of mainstream press coverage due to its links to the TV series, meaning more people bought into the virtual currency.
The people behind the cryptocurrency told fans of the program that they’d need to hold the cryptocurrency to join an online version of the game due to start in November. It said the more people who joined, the larger the reward pool would be. It claimed that developers would pocket 10% of the game’s entry fees, with 90% going to the winner.
In the Korean TV series, hundreds of cash-strapped contestants accept an invitation to compete in children’s games for a tempting prize – but they are killed if they lose a game.
There were several red flags that the cryptocurrency wasn’t legitimate. It didn’t have any affiliation to the Netflix series or an agreement to use its intellectual property, while investors were prevented from selling on their holding.
Initially the creators claimed they were using an ‘anti-dumping technology’ that prevented people from selling their coins in a manner that would distort its market value. But it now looks almost certain that investors have been scammed, with the scammers pocketing about $2m.