The Squid Game Cryptocurrency Scam Scandal Case Study

Since it was discovered to be an apparent scam, a digital token based on the popular South Korean Netflix series Squid Game has lost almost all of its value. A cryptocurrency marketed as a “play-to-earn cryptocurrency,” Squid, had seen its price skyrocket in recent days, increasing by thousands of percent. John Lee couldn’t believe how lucky he had been. The value of his $1,000 investment in Squid, a new cryptocurrency project inspired by the dystopian Netflix drama “Squid Game,” had skyrocketed as the price of the cryptocurrency soared. However, his money was gone in less than five minutes on Monday.

squid game scam

Several characters in the popular Netflix series “Squid Game” took risks with their lives. However, while the cost of playing the game in the real world isn’t as high as it would be in the game of life, the financial loss has been significant for many people who invested their money in Squid. This cryptocurrency was once considered a hot investment after the show. According to digital records, the value of a Squid coin plummeted from a high of just over $2,860 to nearly nothing on Monday morning as cryptocurrency traders watched the token’s unidentified creators drain approximately $3.3 million in funds. In the cryptocurrency community, this maneuver is referred to as a “rug pull,” and it occurs when the token’s developers abandon the project by exchanging a large number of virtual coins for real-world cash. They quickly deplete the product’s liquidity, effectively driving the coin’s value to zero and leaving other investors holding the bag in what appears to be a scam.

Scammers took home a record $14 billion in cryptocurrency in 2021, thanks in large part to the rise of decentralized finance (DeFi) platforms

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A Classic Case of Sky Rocketing & Plummeting

As a result of the new cryptocurrency’s launch late last month, its value skyrocketed as investors flocked to buy tokens that had been hyped by promotions on multiple social media platforms. The project’s Twitter account, which has since been suspended by the social network due to “unusual activity,” had amassed more than 57,000 followers. Its Telegram channel had more than 71,000 subscribers at the time of its suspension. During the period between October 26 and Monday, the value of a Squid coin increased by more than 23 million percent, rising from slightly more than a cent to $2,861.80 per coin. Squid’s rise to fame coincided with the emergence of a thriving parody cryptocurrency market. 

During the past year, the value of two canine-themed tokens, Shiba Inu and Dogecoin, has skyrocketed as their popularity has spread. Squid, a cryptocurrency that allows buyers to participate in online versions of the games depicted in the South Korean dystopian thriller, was marketed as a “play-to-earn” cryptocurrency. Poor and downtrodden people in the show participate in children’s games such as tug of war in the hopes of winning millions of dollars in prize money, but those who lose are brutally murdered for sport. Netflix did not immediately respond to a request for comment, but the company has previously stated that it is not affiliated with the cryptocurrency in question. It was in an investment white paper that was riddled with grammatical errors that the token’s creators claimed that their games did not “provide deadly consequences.”

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Emails sent to Squid’s developers did not arrive in time for the start of business on Tuesday. The “rug pull” was not the first time that cryptocurrency observers raised concerns about Squid. They cited red flags such as social media accounts that did not allow followers or subscribers to leave comments and an amateurish white paper as reasons for concern. After Squid buyers informed the platform that their coins could not be sold, CoinMarketCap, a data provider, advised potential traders to exercise “extreme caution.” While cryptocurrency traders have occasionally been the victims of scams, there have been numerous attempts to make investing in digital coins a more user-friendly experience for them. 

US bank regulators are working to assist financial institutions in retaining their virtual assets. The first exchange-traded fund was tracking the bitcoin futures market launched in mid-October, marking the beginning of a new era in financial regulation. The last message on Squid’s Telegram channel, which was posted shortly after funds had been withdrawn from investors, attempted to shift the blame to another party. “We sincerely apologize for any inconvenience this has caused you,” the message said. “Do not pay attention to anything strange that comes out of it. Thanks!”

What Is A Cryptocurrency Scam?

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Cryptocurrency is a type of digital currency that, in most cases, can only be obtained through electronic means. When using a service that allows you to exchange cryptocurrency for physical tokens, there will be no physical coin or bill to hold in your hand. You typically exchange cryptocurrency with someone online, using your phone or computer, rather than through a third party such as a bank or other financial institution. Cryptocurrencies such as Bitcoin and Ether are well-known, but there are many different cryptocurrency brands, and new ones are constantly being developed. 

Digital wallets are used to store cryptocurrency, and they can be found online, on your computer, or even on an external hard drive. But in the event of a surprise event, such as the failure of a cryptocurrency exchange platform or the delivery of digital currency to the incorrect recipient, or the loss or theft of a cryptocurrency digital wallet or its compromise, you’ll likely find that no one will be able to assist you in reclaiming your lost or stolen cryptocurrency digital wallet funds. Furthermore, because cryptocurrency is typically transferred directly between parties rather than through an intermediary such as a bank, there is often no one to turn to in the event of a problem.

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Their validity is typically ensured by a blockchain system, which includes an open, distributed ledger that records transactions and is constantly updated. However, while different types of cryptocurrencies have existed for many years, they only became widely recognized in 2017 when the price of Bitcoin, one of the more established cryptocurrencies, skyrocketed to nearly $20,000, representing an annual gain of more than 2000 percent. In spite of the “Great Crypto Crash” of 2018, cryptocurrency continues to be extremely popular, with Bitcoin being accompanied by other significant cryptocurrencies such as Etherium, Ripple’s XRP, Binance’s Tether, and countless other alternatives. Apart from that, cryptocurrency exchanges have grown in number and sophistication, providing platforms through which customers can trade cryptocurrencies for a variety of assets, including conventional currency and other digital currencies.

In any financial vehicle, however, there is the potential for bad actors to defraud investors. This is especially true for cryptocurrencies, which are highly volatile and have piqued the public’s interest due to their widespread use. Among government enforcement attorneys, cryptocurrency fraud has emerged as a dominant topic of discussion, with numerous prominent conference panels and agency bulletins addressing its various forms, the hype versus reality, the many ways it can facilitate fraud, and efforts to rein in its abuse. 

The need for whistleblowers to assist the SEC, CFTC, and IRS with their enforcement efforts will only grow in importance as cryptocurrency scams and fraud become more prevalent. The rapidly changing state of the cryptocurrency market today, as well as the type of impact it will have on the future of commerce, elicit a variety of similar reactions from people. As much as the attention of retail investors, speculators, and various types of institutional investors is turning toward the lucrative cryptocurrency markets, scammers and cheats are turning their attention in the same direction as well.

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According to the Federal Trade Commission (FTC) Consumer Sentinel, reports of crypto-related scams increased dramatically from October 2020 to March 31, 2021, with nearly 7,000 people reporting losses totaling more than $80 million during this period. These figures reflect a 12-fold increase in the number of reports when compared to the same period the previous year, as well as a nearly 1,000 percent increase in the amount of money reported as a result of the scam. Because of the exponential increase in reported cryptocurrency scams, it is more important than ever to be aware of the most common types of scams and the types of things you can do to protect yourself from being taken advantage of. 

All types of investors have been attracted to cryptocurrency as a result of the frenzied buying and selling that has taken place over the past several years. Still, scammers have also been attracted to it. Crypto scams are most commonly used to obtain private information such as security codes or to trick an unsuspecting person into sending cryptocurrency to a hacked digital wallet, according to the FBI. The use of social engineering scams such as giveaways, romance scams, phishing, extortion emails, and other methods discussed in this article is a problem in general society, but they are particularly prevalent when it comes to cryptocurrency trading.

People Lose Their All Their Money in Less Than 5 Minutes

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According to the technology website Gizmodo, Squid’s developers have made off with an estimated $3.38 million (£2.48 million). Crypto investors refer to this type of scam as a “rug pull” because it is so common. This occurs when the promoter of a digital token attracts buyers, then halts trading activity and flees with the funds raised from the sale of the digital token. Play-to-earn cryptocurrency is a type of cryptocurrency in which people purchase tokens to use in online games and can earn additional tokens that can be exchanged for other cryptocurrencies or national currencies later on. John Lee couldn’t believe how lucky he had been. 

The value of his $1,000 investment in Squid, a new cryptocurrency project inspired by the dystopian Netflix drama “Squid Game,” had skyrocketed as the price of the cryptocurrency soared. However, his money was gone in less than five minutes on Monday. In what has become one of the most high-profile cryptocurrency collapses of the year, he was one of many investors who were caught up in what some industry experts are warning is a sign of a market that is rife with scams. The digital currency, known as Squid, was launched in late October and saw its value skyrocket as a result of the rapid increase in demand. 

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Following the project’s unknown creators’ apparent cashing out of Squid tokens worth more than $3 million, according to transaction details on a publicly accessible cryptocurrency digital wallet, the price of Squid tokens reached more than $2,860 per token on Monday morning before plummeting to near zero value by the afternoon. Since then, the project’s website, SquidGame.cash, has gone offline, and its social media profiles have been deactivated or deleted entirely. Many investors who spoke with NBC News have come to terms with the fact that they will never see their money again. Some are accusing it of being a scam.

According to archived versions of the cryptocurrency’s website, it had promised investors that they would be invited to participate in a virtual game inspired by the popular Netflix series. They would be able to win rewards. However, a number of clues on Squid’s website suggested that the project was not as straightforward as it appeared. With numerous spelling errors throughout the white paper, which serves as an overview of the project for investors, the token’s website made unsubstantiated claims that it had partnered with Netflix and Microsoft.

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Scammers are constantly inventing new ways to steal your money through the use of cryptocurrency. Anyone who tells you that you have to pay with cryptocurrency is most likely a scam artist. To be more specific, anyone who requests payment via wire transfer, gift card, or cryptocurrency is a scam artist. It goes without saying that if you pay, there’s almost no way to get your money back. This is exactly what the con artists are banking on. So beware and play safe!

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