Hyped-up instruments act as a magnet for rookie investors who want to make a fortune with a single trade. This time, the scammers have used the popular Netflix serial Squid Game by launching the SQUID coin and using attributes of the TV show. The bad actors also retweeted some tweets from popular exchanges to imitate interest in the coin. Normally, after being listed on a new platform, coins see their prices rise, so some investors try to buy them in advance.
According to its white paper, the SQUID token was issued to be exchanged in the game and earned as part of an online tournament. The 'Squid Game', which was slated to start in November, required payment of a certain amount of SQUID to participate. The winners of every round would get 90% of the contributions to the prize fund, and 10% would go to the developers. The number of participants was not limited.
The coin was listed in October on the decentralised exchange PancakeSwap, and trading started at $0.01. Interest in the game caused massive buying of SQUID, and the coin's price hike, in turn, caught traders' interest. The developers actively used mass media to promote their product, resulting in the coin increasing nearly 300,000-fold in one week to reach $2,856 per coin. The daily trading volume exceeded $7 million.
The denouement didn't take long to come. By the end of October, it was discovered that the coin couldn't be sold due to a lack of liquidity; buying it was the only option. At the same time, articles began to emerge that pointed out the low level of competence in the white paper, and co-founder of CoinGecko, Bobby Ong, expressed concerns about the project's fraudulent nature.
When the fraud surfaced, the coin lost all of its gains in one day and became five times cheaper than it was upon listing. It appeared that SQUID trading was its own kind of squid game, the winners of which were the project's developers.
It's worth noting that the rapid growth of any project is not a 100% sign of fraud. The cryptocurrency market is still very young, so its participants often go through big upswings and downswings.
Last year, for example, an anonymous user bought 70 trillion Shiba Inu for $8,000. Now, his fortune is estimated at $5.7 billion.
Some manage to choose the right product early on, and it leads them to fantastic results. Others lose their investment. Do you think the game is worth the candle?
The StormGain Analytical Group
(a platform for trading, exchanging and safeguarding cryptocurrencies)