I can only imagine how the Squid Game characters felt when they knew they had to kill or be killed to get the money. They must have felt cheated, like the entire game was a huge scam, except that it cost them their lives.
This is exactly how people who bought the SQUID tokens must have felt after the anonymous developers of the coin suddenly performed a ‘rug pull’, stealing funds and abandoning the DeFi project. What’s incredible about the story is that there were red flags but people still bought the token.
This is just one of many cryptocurrency scams that have been performed and are still being performed. It is especially high as the cryptocurrency space is seeing more investors.
It is important that you know how to avoid cryptocurrency scams and most importantly, how to identify them.
If you haven’t seen the Squid Game series, you’ll be binge-watching the nine-episode Netflix hit series by the time you are done reading this article. The same way 456 people (fictional characters) got tricked into playing a game that cost them their lives with only a survivor, in the end, is the same way a lot of people were tricked into buying cryptocurrency tokens named after the series; only this time, nobody got the money.
On the 26th of October, 2021, the SQUID tokens were launched by anonymous developers in the form of ‘play-to-earn’ online games. Users could earn tokens and exchange them for other digital assets. The token gained traction as many thought it was associated with the series. Its price shot up from $o.o1 to $2800 in no time as buyers rushed in. However, in early November, the developers performed a ‘rug pull’ (a common scam where the developers of a crypto project steal users’ funds) under the disguise of being overwhelmed by the stress they were experiencing from scammers. They have made away with over $3 million with some investors still holding on in hope of a comeback.
This DeFi project is considered to be one of the many scams in the recent trend where developers tap into cultural sensations like popular TV shows, viral memes and movies. Firstly, the tokens could only be bought and not be withdrawn or sold. Also, any official association to the Netflix series was disproven. However, the developers sold out on the eagerness and excitement of buyers and since the rug pull, the official website and social media accounts of the token has disappeared. This makes me wonder why the investors are still hoping for a comeback. An investigation is being done by Binance and they are taking actions to identify and blacklist addresses affiliated with the developers.
This is not the first cryptocurrency scam and it won’t be the last. The main factor that enables cryptocurrency scams is trading on a decentralised exchange platform or network. This is because regulators have no influence over it and there are no protective mechanisms that reduce the risks of cryptocurrency scams. Although advanced cryptocurrency traders benefit from using DeFi platforms because they can make transactions directly without a middle man and extra fees, they are responsible for protecting their information and they have to trust their sixth senses as there is no vetting process from investing in suspicious crypto projects as in the case of the SQUID token scam.
The cryptocurrency market is volatile and this also accounts for its vulnerability. Although centralised finance (CeFi) exchange platforms like Binance are more secure and have protective mechanisms, they are not without risks, just like decentralised finance (DeFi) exchange platforms.
Cryptocurrency scams can come in other forms including; mining scams; high yield investment programs (HYIP) with persuasive comments on the websites; fake airdrop giveaways where scammers ask for crypto deposits or information that can give them access to your wallet and other confidential financial details; shit-coin/fake crypto projects; fake crypto exchanges; social media scams; Ponzi schemes; and more advanced forms like email phishing and hacks.
The best approach to avoiding cryptocurrency scams is by doing your research. It doesn’t matter if you are a first-time investor or an advanced investor. Before you invest in any projects or buy tokens, study the development teams of the tokens, learn more about the cryptocurrency and find out about the industry backers and every other thing you should know.
You should also use strong passwords for your crypto wallets. Don’t share your Bitcoin wallet information with anyone. It would help if you enable the 2-factor authentication on your crypto wallet and storage devices to prevent intruders and hackers. If you must participate in airdrop giveaways, go for airdrops organised by official handles of cryptocurrencies.
The SQUID token scam can also be categorised as a quick profit scheme because of how fast its value shot up in a short time. You should avoid quick profit schemes and take your time to study and understand the cryptocurrency market before you dive into it.
Cryptocurrency has come to stay and as more people are investing in it, you must learn to identify and avoid scams to make the most of it.