Squid Game Coin Collapsed– How to Avoid Cryptocurrency Scams

2021/11/05 09:41:39

Cryptocurrencies have come a long way in the past decade. From the introduction of Bitcoin in 2009, to where we are today with innovations in technology and various ways to improve how cryptocurrencies function, we are light years more advanced now than when we were back then.

However, as with anything in life, there are people out there that try to take advantage of crypto investors and this fairly new technology. From outright scams, to elaborate schemes, there are a myriad of ways a new investor can lose their money.

What are “Rug pulls”?

Getting rugged or your rug pulled, is the latest slang when it comes to getting scammed in the crypto space. The phrase comes from the age old saying, pulling the rug out from under someone’s feet. It’s suddenly or unexpectedly removing the support or floor from someone leaving them in a problematic situation. In cryptocurrency, getting rug pulled means that the coin has more than likely pulled the floor out from under you, by running away with the investments, the company disappearing, and the investor left with nothing and their money all gone.

How the Squid Game Coin Collapsed?

The most recent crypto coin to rug pull their investors has been Squid Game (SQUID), which was a “Play to Earn” token on the BSC blockchain. The token was launched after the popular Netflix series Squid Game. It rose extremely quickly with a lot of people coming out of the woodwork to pump up the coin, saying how great it was, and how it’s the next Dogecoin or Shiba Inu coin, and of course, not to miss out on this new opportunity.

Sadly, investors who aped into SQUID and invested, lost all their money. The coin launched toward the end of October 2021, and was available for buying on decentralized exchanges including PancakeSwap and DODO. With dubious airdrop announcements, tweets, and Telegram groups, SQUID went from being worth nothing, to gaining some investments and some traction. As the price rose from under a dollar, to ten dollars in a matter of days, fear of missing out (FOMO) kicked in. New investors who don’t know any better wanted to take advantage of this new opportunity and cash in on the latest craze.

Tweet about SQUID scam on Twitter via @_tricck

The price of SQUID then peaked on November 1st, hitting a high of $2,856.64 per coin, surging 33,600%, in just a few short hours. Then abruptly, the price dropped to nearly zero. That was it, the rug was pulled and the people behind the SQUID cryptocurrency suddenly vanished. The estimated total value that they ran off with - $3.42 million. They pulled the rug out from everyone who was trying to invest.

Other Infamous Rug Pulls

Other recent and infamous rug pulls have been for example Luna Yield, where in August 2021 the scammer group walked away with nearly $7 million taken from investors in a DeFi scam on the Solana blockchain. This was a liquidity scam, where investors put funds into a liquidity pool to try to “yield farm” and the scammers stole their money.

Another rug pull that happened in March 2021 was with Meerkat Finance, where the perpetrators stole an estimated $31 million in crypto assets. The DeFi project was running another yield farming liquidity pool, and claim to have been hacked, saying that is why the funds were drained and stolen – however – the team behind Meerkat also then proceeded to disappear, deleting all traces of their online activity including their website and Twitter account, never to be seen again.

How to Avoid Cryptocurrency Scam Coins

Being that these scams and fraudulent coins are so prevalent in this new decentralized emerging space, it’s imperative that investors and users are vigilant and are careful. So, you may wonder how one avoids scams like these?

Going back to the SQUID token as an example, this one seems to have been the most obvious. Clearly, hindsight is 20/20, but there were a lot of red flags that investors should look out for.

For one, the new coin was launched extremely quickly, within days being pumped to millions of dollars. Coin projects that are new take time to develop, build a foundation, and earn new investors and trust. Another red flag was that it attempted to capture the popularity of the Netflix series Squid Game and tricked investors to buy into it. Besides, you will find that their trading chart is very irregular, with prices surging continuously without little or no correction. This is probably wash trading by the team who were sending the misleading information to the market.

Another flag is how quickly the coin gained popularity. Out of nowhere, there were thousands of accounts on Twitter and Telegram promoting this coin. When this happens, you have to take a close look at those accounts, as many of them it turns out were bots or fake accounts, with little to no following and were just pumping the community attempting to give the perception that the SQUID token had a bigger network of investors and users than it really did.

A key piece to not being scammed and avoiding fraud tokens is looking at the team behind the token. Are they known within the greater crypto community or are they unknown, able to disappear in the blink of an eye? Typically, with new cryptocurrencies and teams, they have people including founders or venture capital firms that are well known and can be held accountable if something were to go awry. They also usually bring something new to the table, new technology, new ways to scale or solve a problem – a roadmap with goals - not just to invest and make money.

Additionally, choose a reputable exchange to start your crypto trading journey. It’s a mixed market in the current bull run, with so many emerging “Play-to-Earn meme'' tokens emerging, people could get distracted and go with the flow and media without doing due diligence on a coin you are pouring money in. So the secure and reliable way is to find a trustworthy and secure exchange who have a rigorous screening of token projects. At KuCoin, the listing team does everything from digging into their legitimacy, use cases, community, founding team and every other detail to make sure the projects listed here are reliable. When DeFi is in its initial stages, centralized exchanges could provide users an extra layer of protection.

Closing Thoughts

Ultimately, it’s up to the investor to do their own research, but if it sounds too good to be true, it probably is, and it’s safer to just ignore it. Investing and trading involves risks, and one should always keep that golden rule in mind: Never invest money that you can’t afford to lose. While the above steps are the common sense to spot a scam token, another strategy is to diversify your investment into different portfolios. Even if one token collapses, your losses will be limited.

Investing and trading is a long-lasting learning curve, check out KuCoin Blog where you can learn crypto step by step.