The Squid token –inspired by Netflix Inc (NASDAQ:NFLX)’s The Squid Game series– collapsed after launching on October 26 and being revealed as a possible scam. Rising by thousands of percent in just a few days, the cryptocurrency dived amid criticism of not allowing for reselling and other suspicions.
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On Tuesday, October 26, the cryptocurrency market celebrated the launch of Squid. It debuted at $0.01 and over a few days, it rose more than 230,000% to reach $2,861.80 on Monday.
Out of nowhere and even faster than it rose, it plummeted to$ 0.003161. Neil Wilson, chief analyst at Markets.com, says "It's the downside of this story.”
"If you had put $100 in this coin when it was launched you would be really rich now," he says. However, the cryptocurrency's website is now offline and the official Twitter account of The Squid Game token –which amassed more than 57,000 followers– is now restricted due to "unusual activity."
In recent days, many of the posts on the account had responses turned off –another ominous sign. Ever since it launched, comments were pointing to the cryptocurrency being a scam.
"It looks like a classic 'rug pull', a scam that sees developers abandon a crypto project with investors' money," Wilson says. There were “a couple of clues that should have made it clear that it was a scam.”
Besides the unreliable-looking website and no Netflix affiliation –plus a made-up endorsement from Elon Musk– “the fact that you couldn't sell the tokens you had bought from the company was a pretty big sign that something was going bad.”
Regarding the Squid token affair, Cornell University economist Eswar Prasad told the BBC: “It is one of many schemes by which naïve retail investors are drawn in and exploited by malevolent crypto promoters.”
"In fact, open pump-and-dump schemes are rampant in the crypto world, with investors often jumping in with eyes wide open, perhaps hoping that they can ride the wave and dump their holdings for a quick profit before prices collapse," he said.
Upon launch, Squid was selling on decentralized crypto exchanges such as PancakeSwap and DODO, on which buyers connect directly with sellers without the need of any intermediating authority.
"It looks, feels, and smells like a scam, but be that as it may, a lot of people will have lost a lot of money expecting it to offer big benefits," Wilson laments.