A new and interesting cryptocurrency named Squid, inspired by the popular Netflix series “The Squid Game” suddenly began trading with a price of one rupee only per token in November 2021. It gained the attention of a huge number of media outlets in the subsequent days. Very soon it began trading at $38 per token on a crypto exchange platform named Pancake swap.
Within no time Squid went through huge price fluctuations with the value of the token growing from $628.33 to as high as $2856.65 as per the CoinMarketCap price Index. Then to everyone’s shock, the price went downhill to $0.007 within the next 5 minutes. Millions of dollars vanished in a matter of minutes and even turned to almost zero leaving the investors puzzled.
Apparent Reasons that Led to Such A Huge Crash
As per BscScan, which is a blockchain search engine and analytics platform, about 40,000 individuals had the token with them after the disastrous crash. One of them was a man from Manila, the Philippines named John Lee, aged 30. He said that he invested $1000 on the Squid tokens assuming that the token has been sanctioned by the Netflix show. Lee further added that he was shocked to receive this news and wasn’t even able to sell off the tokens immediately. Now he can sell them but he would be left with nothing at all in total. A spokeswoman from Netflix named Sharon Chan declined to comment on this case when asked.
The reasons as to what led to such a huge crash of Squid were reported by Gizmodo but they weren’t clear and sufficient. The identities of the creators were also ambiguous. Their website had been taken down from the internet and emails sent to the developers of the currency bounced back. The social media channels it had seemed to have been closed. Even its Twitter account was acting weird and wasn’t accepting direct messages nor were they replying.
The leading trading platform for Squid at that time, Pancakeswap, refused to give any kind of comment or clarification. At the peak of this million-dollar scam, a renowned writer named Molly Jane Zuckerman, content head of CoinMarketCap commented, “I’m not seeing the developers coming online and saying, ‘Hold with us, sorry, we’ll figure this out,’ which is what happens when there’s some sort of non-malicious problem”.
Call in to Attention to the Faulty Cryptocurrency System
The epic crash of Squid calls into attention the faulty system and regulation gaps in cryptocurrency tokens since the private firms and government agencies rush to get a stronghold of this volatile but still increasingly famous investment option. Anwar, the editor-in-chief of CoinMarketCap said that such developers of meme coins like that of Squid hardly let themselves get identified. They like to be anonymous. If the investors suspect any faulty business or fraud then they can move from country to country or from regulator to regulator to get the investigation done. Anwar also added that the Squid token brought about some unusual features in the market that alarmed the investors. They made it their policy that the buyers should outnumber the sellers 2-to-1, to allow for the sale to get started.
As per a white paper that was put online by the developers of Squid about the features of the Squid token, they termed the sales limit an “anti dump” mechanism. Anwar claimed that these systems were just meant to initiate the crashes and not prevent the holders from selling in the usual way of trading. The white paper also claimed that the developers needed the token holders to buy another crypto token called Marbles to sell off their Squid tokens. The Marble tokens could be earned as rewards by taking part in an online game that was adapted from the Netflix show. For example, the participants needed to pay an entry fee as high as 465 tokens in the first level of the game itself. As the levels increased, the price to enter also increased.
These features blocked many users from selling off the tokens as the value descended, Zuckerman said. It is difficult to quantify the amount of money that was invested and lost in the tokens, she said. However, BscScan tagged two crypto addresses as being connected with what is called a ‘rugpull’ of Squid. One of them was worth $3.38 million. Both the addresses used Tornado Cash to complete their transactions. Tornado Cash is a coin mixer or a software company that acts as a middle man between various parties. This makes it hard to trace these transactions, said Zuckerman. “Anyone can come up with the name of any cryptocurrency,” she said. “You could make up a ‘Mad Men’ token, a ‘Succession’ token, etc. So it’s essential to perform your own research.”