Squid Game token
From Invertopedia, the encyclopedia of how things fail
Squid Game token (SQUID) was a cryptocurrency named after the Netflix series and sold as the entry fee for an online game based on the show. Its price went from one cent to more than $2,860 in about a week, then fell to almost nothing in about five minutes on November 1, 2021[1][4]. Its anonymous creators appeared to cash out more than $3 million, with reported estimates around $3.38 million[1][4]. Netflix said it had no connection to the project[4].
Contents
The bet
The pitch was a play-to-earn game copied from the tournament in the show. Players would pay SQUID to enter, and the winner would take 90% of the entry fees paid by the players knocked out[1]. Tokens won in the game could be swapped for other cryptocurrencies or for cash[3].
What buyers were really betting on was simpler: the show was everywhere, the price was going up, and someone would buy from them later. Many did not know there was a rule that stopped them from selling until they tried[4].
What happened
| Oct 20, 2021 | SQUID goes on sale as a presale and soon appears on CoinMarketCap.[1] |
|---|---|
| Late Oct 2021 | The price rises more than 35,000% in three days. The white paper is full of spelling errors and the website was registered less than a month earlier.[2] |
| Late Oct 2021 | Gizmodo calls the project an "obvious scam" a week before the crash.[3] |
| Oct 29, 2021 | CoinMarketCap urges buyers to "exercise caution" after reports that holders cannot sell.[4] |
| Nov 1, 2021 | The price passes $2,860 in the morning, then falls to almost zero within about five minutes.[1][4] |
| Nov 1, 2021 | The developers post on Telegram that they do not want to keep running the project. The website goes down and Twitter restricts the account for "unusual activity."[2] |
| Nov 2, 2021 | The website and social media accounts are gone. More than 40,000 holders are left with the token.[4] |
The kill shot
It was a one-way door. A rule in the project let holders sell only when buyers outnumbered sellers two to one, so the rising price never had to face anyone cashing out except the people who ran it.
CoinMarketCap's Molly Zuckerman said holders could sell only when the ratio of buyers to sellers was 2 to 1, and many buyers learned this only when they could not sell[4]. With the exit shut for everyone else, the chart looked like demand.
Then the money left. Public wallet records show the project's creators appearing to cash out tokens worth more than $3 million[4], and BscScan labelled one address as "reported to have been involved in a rug pull" after it dumped SQUID for millions of dollars in BNB[2]. The developers' last word on Telegram was that they were stepping away from the project[2].
Red flags ignored
- Nobody could sell. CoinMarketCap warned buyers about reports that holders could not sell, days before the crash.[4]
- Borrowed fame. It used a hit show's name without a license, and its website claimed partnerships with Netflix and Microsoft that did not exist.[1][4]
- Nobody you could find. The founders listed on the site could not be verified, and emails to its contact address bounced.[1][4]
- No room to object. Twitter replies calling it a scam were hidden, and the Telegram group did not let members post.[1]
- Sloppy paperwork. A white paper full of spelling errors, and a website less than a month old.[2]
The cost
The creators appeared to cash out more than $3 million, with reported estimates of about $3.38 million to $3.4 million[1][3][4]. After the crash SQUID traded at about $0.0025, down nearly 99.99% in a day[2]. More than 40,000 holders were left with it[4]. One buyer in Manila told NBC News he put in $1,000 and could not get it back out[4].
The inversion
Before you buy, check that someone other than the creators has actually sold. If the exit has rules you can't read, the exit isn't yours.
What survived
Nothing, for the buyers. The website and social accounts vanished[3][4], and the creators stayed anonymous[4]. Zuckerman said the project showed "all the signs of a classic rug pull"[4].
It wasn't the first of its kind. Months earlier, a token called Mando, named after Disney's The Mandalorian, had also turned out to be a scam[3].
References
- ^ “Squid Game crypto rug pull: investors meet deadly ending”. Forkast, November 2, 2021. The October 20 presale, the rise from $0.01 to $2,861, the game design, the $3.38 million estimate, the unverifiable team, hidden replies and the locked Telegram.
- ^ “Squid Game Token Crashes; Developers Say They've Left the Project”. CoinDesk, November 1, 2021. The 35,000% rise, the white paper and website red flags, PancakeSwap and DODO, the 99.99% fall, the flagged rug-pull wallet, the Telegram exit and the Twitter restriction.
- ^ “Squid Game based crypto collapses in $3m scam”. Yahoo Finance UK, November 2, 2021. The play-to-earn pitch, the $3.4 million estimate, Gizmodo's earlier warning, the vanished website and the Mando precedent.
- ^ “Investors call scam after collapse of new cryptocurrency Squid”. NBC News, November 2, 2021. The $2,860 peak and five-minute crash, the 2-to-1 selling rule, CoinMarketCap's warning, more than $3 million cashed out, unknown creators, Netflix's denial, the vanished site, 40,000 holders, the Manila buyer.