In the current cryptocurrency investing climate, there seems to be a tendency to follow online trends blindly. That first started with Dogecoin, which had a massive explosion of value in April, culminating in May. Even now, after a significant drop off, the price of Dogecoin is 4-5 times as high as it was before the initial leap. That seems to have made investors remember that there’s massive money to be made from investing based on hype. That’s nothing new in the investment world; however, it has started a craze in the cryptocurrency sphere.
A similar thing happened more recently with another dog-based coin called Shiba Inu (SHIB). About a week ago, it soared, making holders more than content. Such occurrences have emboldened crypto-investors to take a gambling-like approach to shitcoin purchasing. That select group of investors aims to ride the wave of excitement on coins that have very little actual value or application. They hinge on internet popularity, meme potential, and virality, targeting popular coins.
As you can imagine, that blasts the door open for scammers to enter. The crypto sphere is already prone to fraud, with a high degree of decentralization resulting in anonymity. However, they work best when investors purchase coins without much thought. One such scam saw an opportunity in the popular Netflix series Squid Game and made a coin with the same name.
The coin quickly garnered attention, jumping from around $30 to $2,856 per SQUID overnight. Now that sounds like any investor’s dream, and holders must’ve been elated with the growth. However, there was a catch.
One uncomfortable detail about the SQUID token was that you had no way of cashing out.
That’s right; there was no way of collecting money from your Squid Game token. Technically, there was a way of withdrawing some funds by converting it to another shitcoin. After that, you’d be able to cash out, but the fees attached to the transaction meant you would still lose all your money. As such, the result was the same as simply holding your SQUID.
And as everyone expected, a massive rug pull happened, and the value of the coin plummeted to fractions of a cent. The creators and promoters ran off with the money they collected, with an estimated $3.38m.
The creators promoted the token as a play-to-earn model. In theory, you could wager the token in various games, which would then award you with more tokens. However, it did have hallmark signs of a scam, including poor spelling and grammar on promotional outlets.
SQUID had devastating consequences for the people holding it. One Shanghai investor invested their life savings into the coin and lost it all. While it’s easy to point towards them and others that fell for the scam, it’s not entirely fair. The SQUID situation is the culmination of symptoms that have been brewing inside the crypto community for a while. Hopefully, crypto investors will see the situation as a cautionary tale, at least slowing down hype-based investing.
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