Squid Cryptocurrency Crashes, and Investors Lose Money

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The integer money, called Squid, began trading past week for a penny. It soared, spectacularly, earlier the wealth vanished.

A country   from “Squid Game,” the Netflix amusement   that inspired the cryptocurrency called Squid.
Credit...Youngkyu Park/Netflix, via Associated Press

John Yoon

Nov. 2, 2021Updated 5:07 a.m. ET

Millions of dollars vanished successful a substance of minutes aft investors piled into a caller cryptocurrency inspired by “Squid Game,” the fashionable Netflix endurance show, lone to ticker its worth plunge to astir zero successful a fewer abbreviated hours.

The cryptocurrency, called Squid, began trading aboriginal past week astatine a terms of conscionable 1 penny per token. In the pursuing days, it drew attention from a number of mainstream media outlets. By aboriginal Monday, it was trading astatine $38 a token connected a cryptocurrency speech called Pancakeswap.

Then Squid went connected a roller-coaster ride. In a 10-minute span aboriginal connected Monday, the token’s worth grew from $628.33 to $2,856.65, according to CoinMarketCap, a crypto information tracking website. Then, 5 melodramatic minutes later, it traded astatine $0.0007.

More than 40,000 radical inactive held the token aft the crash, according to BscScan, a blockchain hunt motor and analytics platform. One of them was John Lee, 30, of Manila. He said helium had spent $1,000 connected the Squid tokens, reasoning “somewhat instinctively” that the token had been authorized by the Netflix show.

Mr. Lee said helium was amazed erstwhile helium learned that helium was not beryllium capable to merchantability the token immediately. He tin merchantability the tokens now. But he’d beryllium near with “almost nothing,” helium said.

Sharon Chan, a spokeswoman for Netflix, declined to comment.

The reasons down Squid’s collapse, reported earlier by Gizmodo, weren’t clear. Neither were the identities of its creators. Its website appeared to person been taken offline. An email sent to its developers bounced back. Its societal media channels appeared to person been unopen down. Its Twitter relationship was not accepting nonstop messages oregon replies.

Pancakeswap, the trading platform, did not respond to a petition for comment.

In the aftermath, the cryptocurrency satellite is mulling whether Squid was what Molly Jane Zuckerman, caput of contented astatine CoinMarketCap, called a “rug pull.” In a rug pull, she said, a cryptocurrency’s backers efficaciously permission the marketplace and instrumentality their investors’ funds with them.

“I’m not seeing the developers coming online and saying, ‘hold with us, truthful sorry, we’ll fig this out,’ which is what happens erstwhile there’s immoderate benignant of non-malicious problem,” she said.

Squid’s clang highlights the regulatory gaps implicit cryptocurrencies, arsenic government agencies and private firms unreserved to get a grip connected the volatile yet progressively fashionable investment.

Developers of meme coins similar Squid seldom place themselves, said Yousra Anwar, an exertion astatine CoinMarketCap. If investors fishy fiscal wrongdoing, they could get passed from state to country, oregon from regulator to regulator, to investigate.

Squid came with immoderate antithetic features that mightiness person alarmed investors, Ms. Anwar said. The developers required that buyers outnumber sellers two-to-one to let a sale.

The developers called the income bounds an “anti-dump” mechanism, according to a achromatic insubstantial — the papers successful which developers picture the features and method underpinnings of their cryptocurrency — that had erstwhile been online. Ms. Anwar said specified mechanisms are meant to stem crashes, not forestall holders from selling successful the mean people of trading.

The developers besides required users to get tokens of a 2nd cryptocurrency, called Marbles, to merchantability their Squid tokens, according to the achromatic paper. Marbles could beryllium earned lone by participating successful an online crippled inspired by the show. To enactment successful the archetypal game, for example, players needed to wage a steep introduction interest of 456 Squid tokens. The consequent levels outgo thousands of tokens to enter.

Those features prevented galore holders from selling arsenic the worth plunged, Ms. Zuckerman said.

The magnitude of wealth invested and mislaid successful the tokens is hard to quantify, she said. But BscScan labeled 2 crypto addresses arsenic being associated with what it called a “rug pull” of Squid. One of them swapped $3.38 million worthy of Squid into a fashionable crypto called BNB, the BscScan leafage showed. To implicit transactions, some addresses utilized Tornado Cash, which is simply a “coin mixer,” oregon a bundle institution that serves arsenic a middleman betwixt parties and makes it hard to hint transactions, Ms. Zuckerman said.

“Anyone tin marque up the sanction of immoderate cryptocurrency,” she cautioned investors. “You could marque up a ‘Mad Men’ token, a ‘Succession’ token. So it’s truly important to bash your ain research.”

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