Digital token Squid, which was inspired by the blockbuster South Korean Netflix series Squid Game, plunged 99 per cent to less than half a cent on November 1 ($2,861 to $0.0007), wiping away $3 million worth of investor wealth in just 24 hours, according to data from CoinMarketCap, a global cryptocurrency exchange.
The token rode on the popularity of the Netflix series to reach a peak value of $2,861 recently. After its launch, the token’s value rose dramatically, and just 72 hours later, it was worth $4.42 which was an increase of 44,100 per cent, according to CoinMarketCap data.
Squid token was launched last week at a price of just $0.01 and was meant to give access to an online play-to-earn game inspired by the brutal survivor drama. Much like how various indebted people play do-or-die versions of children’s games to win money in the Netflix series, investors thought a similarly-planned crypto game would win them more Squid tokens.
“Leveraged as a 'play-to-earn' cryptocurrency, people had to buy the tokens to participate in the game and as the game grew popular, it ensured more and more investors jumped in to partake and invest. But investors need to be mindful of the fact that some of these tokens are extremely risky. Investors can risk losing all their cash in these kinds of newer and less popular coins as they operate on very low liquidity and are, therefore, extremely risky when compared to established ones like Bitcoin and Ethereum,” says Gaurav Dahake, founder and CEO, Bitbns, a crypto exchange.
Investors ignored numerous red flags, including grammatical and spelling errors in the project’s white paper.
“Within a week, Squid, a token-based on Netflix’s most popular show Squid Game, skyrocketed to more than 230,000 per cent and nose-dived to less than half a cent on Monday wiping out investors’ money. The token had an anti-dumping technology which meant that you could buy the token but couldn’t sell it at your will. A red flag that went unnoticed by many. It's necessary to exercise caution, perform due diligence and research. Resist giving in to the temptation of returns driving the meme coin mania,” says Sharat Chandra, a blockchain and emerging tech evangelist.
The project’s website, which was registered less than a month ago, is now defunct.
“The value of these cryptos can either surge or plummet in the blink of an eye. Hence, centralized exchanges like us do not list them. We would always advise investors to avoid market chaos and indulge only in cryptos that are listed on popular exchanges,” says Dahake.
It’s important to watch out for cryptocurrency frauds as it’s a new investment product ridden with volatility and risks.