"Squid Game" crypto coin promoters vanish with investor millions in "rug pull" scam
While the fate of many contestants in the fictional "Squid Game" series from South Korea was a quick death, for investors in a cryptocurrency inspired by the global sensation, things didn't pan out so well either.
Last week, an unknown developer launched a crypto token inspired by the wildly popular Netflix show about a deadly game in which players risk their lives to dig themselves out of extreme financial debt. Called Squid, the digital currency began trading on the PancakeSwap platform on October 26 at a penny per token, according to crypto-pricing website CoinMarketCap. The price grew to $2,861 by Monday, according to CoinMarketCap data.
Not long after the Squid coin hit the market, CoinMarketCap issued a warning to investors that something was amiss. Someone had dismantled the Squid coin website and promotors of the cryptocurrency could no longer be reached, CoinMarketCap said.
"We have received multiple reports that the website and socials are no longer functional and users are not able to sell this token in Pancakeswap," CoinMarketCap said on its website. "There is growing evidence that this project has been rugged. Please do your own due diligence and exercise extreme caution."
More than 43,000 investors bought the Squid currency and now blockchain experts believe those people have become prey to what's called a "rug pull" scam, in which developers bail on a digital currency as soon as investors have poured lots of money into the asset.
The common crypto scam has accounted for $113 million in investor losses between January and July, according to a report from cryptocurrency intelligence firm CipherTrace. The makers of the Squid token likely made off with about $3.3 million, according to an estimate reported by Gizmodo.
Squid coin investors probably won't get their money back, said J.P. Richardson, CEO of blockchain wallet company Exodus. The incident highlights how important it is for investors to carefully choose where they place their money, Richardson said.
"Tale as old as time"
"It's a tale as old as time," Richardson told CBS MoneyWatch. "Do your own research. Go to the website, verify that the team is real people."
The Squid currency creators took advantage of a current moment in time in which the Korean survival show has become a major hit, and investors — particularly millennial and Gen Z savers — want to see high returns in a short time, Richardson said. But people should have seen the scam coming, he said. One dead giveaway: the Squid coin website told investors their money had to be secured behind an anti-dump technology feature.
"If your money has to be locked up, that made it pretty clear it was a scam," Richardson said.
PancakeSwap did not return requests for comment Tuesday. The platform has officially labeled the Squid offering a rug pull scam.
Digital currency scams have been at the center of many of this year's biggest financial losses. The Federal Trade Commission said scammers are finding creative ways to con people into fraudulent crypto investments. One such scheme offers crypto investment "tips" online then redirects consumers to fraudulent sites. In another, scammers pose as celebrities, such as billionaire Elon Musk, to trick consumers into sending them cryptocurrency, promising them the celebrity will contribute to their investment.
Despite the rampant fraud and price instability, cryptocurrencies continue to grow into mainstream acceptance. Bitcoin reached a record high price of nearly $50,000 in February, in part because more companies are accepting it as a form of payment. Ethereum and dogecoin also hit record-high prices earlier this year.