The international TV sensation Squid Game has been a massive success, and some people out there have tried to capitalise on this by creating a cryptocurrency scam.
I’m going to break down exactly what happened with this cryptocurrency fraud, including how the scam worked and what happened to investors’ money.
What is the Squid Game (SQUID) cryptocurrency?
This new crypto was created recently and was actually based around quite a cool concept.
The basic premise was to create an online game version of the hit TV show where users could use their ‘SQUID’ tokens to play the game. You were supposed to have the chance to earn more tokens which could then be exchanged for other cryptocurrencies or cash.
Sounds fun, right? Well, plenty of gamers and investors thought so too. This ‘play-to-earn’ model has become increasingly popular in the digital token space, and many believe it will be the future of gaming.
Why did investors put money into this cryptocurrency?
Part of the interest in the SQUID token was excitement around the concept. But then there were also lots of investors who were simply speculating on the price.
After the success of some meme stocks and digital meme coins like Dogecoin, investors were desperate to hop onto ‘the next big thing’, hoping to get rich quick.
By combining the popular Squid Game TV show with cryptocurrency, the creators were merging pop culture with crypto technology. An enticing mix, right?
How did the Squid Game cryptocurrency scam work?
It seems as though this whole gaming premise came about through bad intentions.
The creators had no interest in actually making an exciting game. They wanted to attract as much money from investors as possible and then perform a ‘rug pull’.
Investors, traders, gamers and speculators put loads of money into SQUID tokens. The token’s value then sky-rocketed from $0.01 to $2,856. But holders began to realise they weren’t able to sell their tokens.
In order to stop investors from worrying about not being able to take out their money, the creators gave some interesting excuses. They claimed that the digital asset was not for whales (large investors) and so every withdrawal had to be accepted by their tech, which was supposed to prevent market manipulation of the token.
What has happened to investors’ cryptocurrency and money?
The game itself was due to go live this month. However, things have taken an ugly turn:
- The token price has plummeted by 99.99%
- Social media accounts promoting the token have disappeared
- The website for the game is no longer online
According to Gizmondo, it’s estimated that the creators have walked away with around £2.48 million of investors’ cash.
There is no proper regulation in the cryptocurrency industry, so these scams are quite easy to pull off. Scammers just need to combine a cool-sounding idea and some good marketing skills in order to convince unsuspecting investors to take a chance.
How can you stay safe when investing in cryptocurrency?
The lack of regulation does make it easier for fraud and scams to take place. This doesn’t mean that all cryptocurrencies are scams. But it does mean that if you’re investing in unregulated assets, even more care needs to be taken.
Be wary of new projects that crop up and sound too good to be true. You can try to avoid scams with thorough research and making sure you’re not throwing money blindly into something. But sometimes even due diligence isn’t enough.
Even the biggest projects, like Bitcoin, that have been around for years still carry a lot of risk. Not because the blockchain technology is a scam, but due to the fact that the decentralised nature of most cryptocurrencies means there is no safety net for investors.
Investing in cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
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About the author
George is a writer and qualified financial adviser focused on educating others in personal finance & investing.
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