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Be aware of crypto scams – a case study of Squid Game token

Cryptocurrency world has always been a place where hackers, fraudsters and criminals had easy access to a broad audience of naïve newcomers. Although it might feel that sometimes it is difficult to spot a fraud or a scam in the pool of cryptocurrencies, this was not the case for Squid Game (SQUID).

What happened with the Squid Game?

Squid Game (SQUID) was a token that was clearly inspired by incredibly successful Korean Netflix series Squid Game, in which players were eliminated through different games to find the winner. This mini series was so popular, that some “experts” in the cryptocurrency world wanted to have a piece of the cake for themselves and created a Squid Game (SQUID) token.

Although the token was not anyhow affiliated with the producers of the mini series as per Netflix claims, it rose by over 130 000 % in less than a week. This rise was extremely impressive even for the cryptocurrency world, although it was very clear from the start that there is something fishy about this project. On Monday, when it reached the price of 2 800 dollars, rising from less than 0.07 dollars, the project was rugged, leaving all the investors empty-handed. What happened and how can investors make sure that they do not invest in the likes scams of Squid Game ever again? Here are some tips.

Few helpful tips for avoiding crypto scams

1. Countless red flags

While it is not always the best decision to be extremely cautious and not take any risks, in the world of cryptocurrencies one has to always double or triple check everything before investing. With Squid Game token there were countless red flags that needed to be addressed and frankly that showed, this was a scam. Even the official website of CoinMarketCap had included this kind of disclaimer on its website for Squid Game token:

“We have received multiple reports that the website and social are no longer functional & users are not able to sell this token in Pancakeswap. There is growing evidence that this project has rugged. Please do your own due diligence and exercise extreme caution. This project, while clearly inspired by the Netflix show of the same name, is NOT affiliated with the official IP.” coinmarketcap.com

2. No team and terrible social media

As the disclaimer from the CMC showed, there was no easy access to find any reliable information about the team. And while this worked in case of Bitcoin, not many projects in todays cryptocurrency world can go without functioning team or social media behind it.

For instance, the official Telegram group of the token, which had around 90 000 followers only served for the purpose of the scammers to spread the information around, while the users could not contribute to the debate. There was also no possible way of contacting the core team and get answers, since even the “official” Twitter account had comment section disabled. Moreover, the accounts were banned many times, leading to the creators of this scam to running several different Twitter accounts.

3. Questionable website and whitepaper

The token had also a whitepaper, which in cryptocurrency world is a more than common occurrence. The team usually uses the whitepaper to communicate the vision of the project, its goals and problems it solves, as well as shows the tokenomics and technology behind the idea. In many cases it is the most important document that the team has to release and therefore the standards for whitepaper writing are pretty high.

However, in the case of Squid Game token the whitepaper was clearly missing a lot. There were many grammatical errors, unofficial and unverifiable claims. One of them for instance stated, that the official token has been sold in one second on 20th of October in some mysterious presale. The same goes for website. The design as well as usability and structure were more than suspicious.

4. Anti-dump mechanism

If all the above mentioned red flags are not enough for the investor, this last one should probably be the most important one. The token had an “anti-dump mechanism” embedded in the code, which simply put, means that the owners of the cryptocurrency cannot sell the tokens. That means that once you buy it, there is no way for you to get rid of it, even if it makes profits of tens of thousands, which was the case for Squid Game. While the idea behind this might be to stop whales from manipulating the price, in this case it stopped people from realizing the profits and showed that this token was never truly meant to be a cryptocurrency.

Chart of Squid Game token 1 day chart of Squid Game token, Source: coinmarketcap.com

Sad story with happy ending?

The combination of several major red flags should be more than enough to discourage anyone to put capital into projects such as this one. Cryptocurrency world is full of great ideas and solid teams that are trying to build something bigger. But the case of Squid Game was not one of the.

On the 1st of November, the token was rugged, leading to the loss of 99 % of its value. The creators used their own backdoors in the code to run away with all the funds trapped inside the liquidity pools (approximately 2 million dollars), leading to a drop from 2 860 dollars to the current levels of 0.015 dollars. For investors in this project it is definitely a sad story. However, it can teach many of us an easy lesson on how to avoid scams in the cryptocurrency industry by looking for different red flags.

Marek is a cryptocurrency enthusiast with several years worth of experience in the industry. He has been working with numerous cryptocurrency and FinTech projects, where his main r...

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