Within one week, the cryptocurrency known as Squid, inspired by the Netflix series Squid Game, went from being a fast-rising decentralized digital currency to an apparent scam. Launched in late October, Squid’s coin value increased by more than 23 million percent and reached a peak value of $2,861.80 as of November 1. The coin was essentially worthless later that day.
Although the identity of Squid’s creator(s) is unknown, the cryptocurrency was promoted heavily across multiple social media platforms. More than 71,000 people subscribed to its Telegram channel and over 57,000 people followed its Twitter account. The unknown developers announced they were discontinuing the project on their Telegram channel. In doing so, they cleaned out more than $3 million in trader funds. This move is known as a “rug pull” in the crypto world—and it isn’t uncommon.
Two days before the rug pull, BGR blogger Chris Smith posted an article with the headline “Avoid This Enticing New Squid Game Cryptocurrency Scam at All Costs.” The coin had surged nearly 25,000 percent at the time of the article, but there had already been some red flags regarding its legitimacy.
The coin’s white paper was riddled with spelling errors and unverifiable claims, but the biggest sign it was a scam was the fact that investors couldn’t cash out. Major cryptocurrencies like Bitcoin and Ethereum allow traders to sell coins or store them in a digital wallet. Squid, meanwhile, could only be purchased on a decentralized exchange service known as PancakeSwap and couldn’t be sold. Data provider CoinMarketCap cautioned prospective traders to avoid Squid before the rug pull.
Cryptocurrency traders should exercise extensive due diligence with all investments, but one of the easiest ways to avoid being scammed is to use legitimate, secure trading platforms such as Coinbase or Binance. Coinbase, for instance, has more than 68 million users worldwide and stores 98 percent of trader funds offline to prevent loss and theft. It also offers up to $250,000 in FDIC insurance.
Cryptocurrency scammers frequently use fake accounts or bots on social media sites like Facebook and Twitter to attract potential investors. Fake apps and websites are also common. According to Bitcoin News, thousands of people have fallen victim to fake cryptocurrency apps. Similarly, fake websites resembling legitimate companies have also fooled traders. Scammers have even gone so far as to purchase domains with slight misspellings from legitimate URLs to steal from traders’ crypto wallets. Make sure to double-check website URLs for accuracy and avoid all sites that don’t have the lock pad icon near the URL bar.