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Squid Game based crypto collapses in $3m scam

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Squid Game. Photo: Netflix
The currency, called Squid, marketed itself as a 'play-to-earn cryptocurrency', where people can earn more tokens in online games which can be exchanged for other cryptocurrencies or national currencies. Photo: Netflix

A crypto currency inspired by the hugely popular South Korean Netflix (NFLX) series Squid Game has turned out to be a scam, with its developers reportedly making off with around $3.4m (£2.5m). 

The currency, called Squid, marketed itself as a "play-to-earn cryptocurrency", where people can earn more tokens in online games which can be exchanged for other cryptocurrencies or national currencies.

It was sold as a way to play an upcoming online game based on the series.

Squid launched in late October and saw its price surge in the last few days. It went from one cent to as high as around $2,800, before plunging to $0 on Monday. Its website disappeared, along with every other social media presence, and its Twitter account, which had gained 57,000 followers, was blocked due to “unusual activity”.

Squid game to USD chart
Squid went from one cent to as high as around $2,800, before plunging to $0 on Monday. Chart: CoinMarketCap

“Squid Game Dev does not want to continue running the project,” the developers wrote on their Telegram channel, saying they were “depressed” by scammers and “overwhelmed with stress.”

"The value of Squid Game meme coin becoming null in a matter of minutes is a classic portrayal of superficial value maximisation," Kunal Sawhney, CEO at equities research firm Kalkine Group told Yahoo Finance UK.

"Such movements are exceptionally bizarre as people are increasingly tilting towards these unregulated instruments without actually knowing the underlying value behind them," he said.

According to him, the crypto ecosystem has flourished with bitcoin getting recognition on a conventional bourse, but emerging cryptocurrencies and meme coins remain highly susceptible "to such bamboozles" which is why institutional investors only have exposure in a handful of crypto-assets. 

Read more: Why is Shiba Inu winning over dogecoin?

He believes "the evident bull run in the cryptos could halt sooner-than-expected, once a regulatory authority confirms the extent of wrongdoing."

Squid was available for sale on decentralised crypto exchanges including PancakeSwap and DODO.

Last week, Gizmodo had published a story about how the token was an "obvious scam" for several reasons — the biggest one being that investors can put money into the cryptocurrency, but there was no evidence to show they could withdraw it.

Another red flag was that its website was "filled with poor grammar, bizarre spelling errors, and claims that are impossible to verify."

Gizmodo criticised websites like the BBC and Business Insider for covering the crypto without pointing out these concerns.

"The hope to get refunded appears to be dashed, while experts warned that investors might never get their money back," said Farah Mourad, senior market analyst at trading platform XTB MENA.

Over 40,000 investors kept their token after the crash, she said, adding that "the case raises, once again, many questions concerning unconventional investment opportunities."

Read more: From Ethereum to Shiba Inu: Top cryptos in five charts

"Besides its extremely volatile market and sensitivity, investors in the crypto world should deeply understand the high risks before investing, reading document releases, checking technical information and cryptocurrency white papers, while understanding the associated hazard with crypto projects."

This is not the first time scammers have tried to leverage a successful show. In April, a cryptocurrency called "Mando" appeared online, based on Disney's (DIS) The Mandalorian, which also turned out to be a big scam.

Watch: What are the risks of investing in cryptocurrency?

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