By Evan Spicer
Director of Cryptocurrency Investigations
Apart for people living in caves, everyone has heard of Netflix’s wildly popular South Korean survival series Squid Game. Not only are people around the world hooked on binge-watching episodes of this series, but Squid Game has also inspired plenty of merchandise and even a cryptocurrency. However, investors in this crypto fraud found it less entertaining than the series.
The volatility of cryptocurrencies is widely known, but few were prepared for the rollercoaster ride the crypto coin called Squid took investors on in early November. Investors saw the value of this so-called “play to earn” coin go a few hundred to over $2,800 and back in a matter of minutes. This crypto scam is known as a “rug pull,” because the creators of the coin do not allow customers to resell it before they shut it all down and make off with the money.
Tracking down these crypto schemes on the blockchain can be a challenge, but fund recovery professionals are often successful in getting money back for customers. MyChargeBack experts guide clients through the chargeback process. We create intelligence reports and crypto reports to bolster our clients’ cases.
We also guide consumers who are trying to recover their funds from broker disputes, forex scams, or other types of fraud. Talk to MyChargeBack professionals and get started on fund recovery.
Fun or Danger: Anatomy of the Squid Cryptocurrency Scheme
Cryptocurrency, like Squid Game, is wildly popular. When someone had the idea to combine these two, they created a scheme that would attract tens of thousands of investors and make millions.
Squid is marketed as a play-to-earn cryptocurrency. Players use tokens to play online games where they can earn more tokens that can be exchanged for cryptocurrencies. This may sound good, but the advantage depends on the cryptocurrencies offered having actual value. Those who invested in Squid may have seen the value of the currency rise only to drop in minutes.
One of the ways those behind Squid trapped investors was not to allow resale of the currency. Those who use play-to-earn cryptocurrency to make money need to know they can resell it. When those who purchased Squid found they were unable to do this, they were already stuck in the Squid scheme.
The Squid cryptocurrency debacle is an example of what crypto experts call a “rug pull.” This occurs when those behind the scheme attract buyers and investors, shut down withdrawals and resells, make off with the money, and disappear. It is no accident that this scheme has completely disappeared from social media and crypto platforms, which almost always happens with crypto frauds.
The most dramatic moment in the Squid affair was in early November when the currency was trading at a mere penny a token and then rose to $38 on the independent crypto platform PancakeSwap. In the decisive incident, the currency rose from $678 to $2,856, only to drop down to zero.
There were 40,000 people invested in Squid at the time this happened, and their entire holdings were wiped out. More than a few commented that they believed the cryptocurrency had the backing of Netflix. The streaming company, however, denied any connection with the cryptocurrency.
Squid has vanished from Twitter and other social media platforms. The crypto platform PancakeSwap declined to comment on the incident. Crypto experts say it may be possible that some outside event was the cause of the sudden decline, but this is not likely, since those behind Squid did not identify themselves and are completely incommunicado.
Usually, the creators of a legitimate cryptocurrency would reach out to customers and try to find out the source of the problem. The silence and lack of transparency is an indication that this is a crypto fraud.
How Investors Could Have Avoided the Squid Crypto Scheme
Unfortunately, investors only realized they were locked into their holdings and could not resell the cryptocurrency when it was too late. However, Squid had some red flags from the very beginning. The following were signs that should have alerted investors that there were problems with Squid:
- Not regulated
- Only social media presence
- Playing on a trend
- No transparency
- Trade relies on hype rather than the underlying value
Trading cryptocurrencies can be profitable for investors who are aware of the risks, volatility and who trade with a regulated broker. Before buying cryptocurrency, it is important to examine the platform or broker thoroughly to ensure they are regulated and that there is some oversight to protect clients.
Many crypto scams are present only on social media. It is relatively easy to appear and vanish on social media than to create a fake company and try to disappear a website. In addition, social media allows these schemes to block users once they have taken their money.
Squid depended on the popularity of a TV show rather than on the inherent value of the crypto asset. The fact that they used the Squid name, even though it was unauthorized usage, gave them fake credibility and convinced many investors that there was a major company, Netflix, behind the currency even though it was not.
This is connected to the issue of transparency. No one knew the actual identities of the people behind Squid. It is important that before purchasing crypto coins to research the identity and professional histories of people behind crypto coins.
How to Stay Safe with Cryptocurrencies
Before buying or trading cryptocurrency, do thorough research. Work with a regulated broker or a licensed platform. Know who is behind the cryptocurrency and avoid coins that are related to very popular trends because these are fueled by hype rather than real value.
If you have lost money in a crypto fraud, it is important to seek fund recovery guidance immediately. Consult with MyChargeBack experts who will help you with chargebacks, wire recalls, and crypto recovery. Our expertise can improve your chances of getting your money back.