Millions of dollars vanished within minutes after investors crammed into a new cryptocurrency inspired by Netflix’s popular survival show “Squid Game,” only to see its value drop to near zero within hours.
The cryptocurrency, called Squid, started trading early last week at a price of just one penny per token. In the following days, it gained the attention of a number of mainstream media. Early Monday, it was trading at $ 38 a token on a cryptocurrency exchange called Pancakeswap.
Then Squid took a roller coaster ride. On Monday, within 10 minutes, the token’s value rose from $ 628.33 to $ 2,856.65, according to CoinMarketCap, a crypto data tracking website. Then, five dramatic minutes later, it was trading at $ 0.0007.
More than 40,000 people still held the token after the crash, according to BscScan, a blockchain search engine and analytics platform. One of them was John Lee, 30, from Manila. He said he spent $ 1,000 on the Squid tokens, “a little instinctively” thinking that the token had been licensed by the Netflix show.
Mr. Lee said he was surprised to learn that he was unable to sell the token immediately. He can sell the tokens now. But he would end up with “next to nothing,” he said.
Sharon Chan, spokesperson for Netflix, declined to comment.
The reasons for Squid’s collapse, reported earlier by Gizmodo, were not clear. The identity of its creators either. Its website appears to have been taken offline. An email sent to its developers bounced. His social media channels appeared to have been shut down. His Twitter account was not accepting direct messages or replies.
Pancakeswap, the trading platform, did not respond to a request for comment.
In the process, the cryptocurrency world is wondering if Squid was what Molly Jane Zuckerman, Content Manager at CoinMarketCap, called a ‘carpet draw’. In a carpet movement, she said, the backers of a cryptocurrency are effectively leaving the market and taking their investors’ funds with them.
“I don’t see the developers coming online and saying, ‘wait for us, so sorry, we’ll figure it out,’ which happens when there’s some kind of non-malicious problem,” she said. declared.
Squid’s crash highlights regulatory loopholes on cryptocurrencies, as government agencies and private companies rush to bring volatile but increasingly popular investing under control.
Even coin developers like Squid rarely identify with each other, said Yousra Anwar, editor at CoinMarketCap. If investors suspect financial wrongdoing, it could be passed from country to country, or regulator to regulator, to investigate.
What you need to know about the ‘Squid Game’
Have you ever heard of this dystopian South Korean drama? It was released on Netflix on September 17 and quickly gained a worldwide audience. Here’s a look at this unique hit:
- An interview with the star of the show: Lee Jung-jae discusses the show’s message, the possibilities of a Season 2, and why he thinks critics should revisit it.
- Behind the global call: “Squid Game” exploits South Korea’s concerns about expensive housing and scarce jobs, concerns familiar to its US and international viewers.
- To read on the show: Wondering if you should dive? We’ve rounded up what’s worth reading from the Ink Oceans on the series.
- What is Dalgona Candy? : Interest in the South Korean treat has increased since the show started. Here’s why.
- What to watch next: Are you done with “Squid Game” and loved it? Add these six TV shows and movies to your streaming queue.
Squid came up with some unusual characteristics that might have alarmed investors, Ms. Anwar said. The developers demanded twice as many buyers as sellers to make a sale possible.
The developers called the sell limit an “anti-dumping” mechanism, according to a white paper – the document in which developers describe the characteristics and technical underpinnings of their cryptocurrency – which was once online. Ms Anwar said such mechanisms are intended to stem crashes, not to prevent holders from selling in the normal course of transactions.
The developers also asked users to get tokens from a second cryptocurrency, called Marbles, to sell their Squid tokens, according to the white paper. Marbles could only be won by participating in an online game inspired by the series. To participate in the first game, for example, players had to pay a hefty entry fee of 456 Squid Tokens. The following levels cost thousands of tokens to enter.
These characteristics prevented many holders from selling when the value fell, Ms. Zuckerman said.
The amount of money invested and lost in tokens is difficult to quantify, she said. But BscScan tagged two crypto addresses as being associated with what it called a Squid “carpet pull”. One of them traded $ 3.38 million from Squid for a popular crypto called BNB, the BscScan page showed. To complete the transactions, the two addresses used Tornado Cash, which is a “coin mixer” or software company that acts as an intermediary between the parties and makes it difficult to track transactions, Ms. Zuckerman said.
“Anyone can invent the name of any cryptocurrency,” she warned investors. “You can create a ‘Mad Men’ token, a ‘Succession’ token. It is therefore very important to do your own research.