khoji parkCrypto · Worldwide · 2021
A Squid Game Token Soared While Buyers Struggled to Sell
A digital token inspired by a popular streaming series collapsed after developers drained liquidity.
Read in slides1. Themed Token Launch
A digital token named $SQUID emerged on decentralized exchanges, capitalizing on the immense popularity of a hit South Korean streaming series. The creators marketed the cryptocurrency as a revolutionary play-to-earn asset tied to an upcoming fan-made online game. Investors were led to believe they could use the tokens to participate in virtual challenges and earn redeemable rewards. The project quickly attracted significant attention from retail investors seeking quick financial gains.
Promoters marketed the token as a play-to-earn cryptocurrency.
2. Meteoric Price Surge
The cryptocurrency experienced a massive surge in value within days of its launch on decentralized platforms. Promoters and online hype drove the price up by thousands of percentage points as buyers rushed to acquire the asset. Trading volumes multiplied rapidly as retail investors joined the speculative frenzy. The token's rapid appreciation drew widespread media attention across financial and technology news outlets.
The token's price skyrocketed by thousands of percentage points.
3. Trading Restrictions
Despite the soaring price, critical observers noted suspicious patterns in the token's smart contract code. Investors attempting to cash out their holdings discovered that they were unable to sell their tokens on the exchanges. This restriction prevented buyers from realizing profits or recovering their initial investments as values climbed. The inability to resell served as a major warning sign to cryptocurrency experts monitoring the project.
Investors quickly discovered they could not sell their tokens.
4. Warnings Before the Collapse
CoinMarketCap warned that buyers were reporting difficulty selling SQUID. Reports also noted spelling and grammatical mistakes in the project's white paper. Purchases continued while those warnings were public. One anonymous investor told CoinMarketCap that a $5,000 investment had been lost, describing the money as all they had put into the project.
Warnings were public before the price collapsed.
5. Sudden Collapse
On November 1, 2021, the market value of the token plummeted from its peak of over $2,800 to a fraction of a cent in a matter of moments. The developers executed a classic rug pull by draining the liquidity pools on decentralized exchanges. This abrupt action erased all remaining financial value from the token holdings of thousands of users. Investors were left holding worthless digital assets while the creators severed all connections to the project.
The token value collapsed entirely in an apparent rug pull.
6. Disappearance of Creators
Immediately following the market crash, the project's website and associated social media accounts vanished entirely from the internet. The anonymous developers severed all communication channels and erased traces of their online presence. Estimates indicated that the creators made off with approximately 3.3 million dollars in stolen funds from the liquidity drain. The sudden disappearance left victims with no direct recourse against the anonymous operators.
The creators vanished online after draining project liquidity.
7. Concealing the Funds
After the collapse, blockchain analysts examined transactions associated with the project while buyers tried to establish what had happened to their money. The quoted token price had risen before the withdrawal of funds, but selling restrictions had prevented many holders from realizing that price. The trading record and the cash-out transactions became evidence for accounts of the apparent fraud.
The quoted peak price had not been an available exit for every buyer.
8. An Unauthorized Project
The November 2021 collapse followed reports that buyers could not sell normally and that project operators had withdrawn liquidity. Investigators and reporting described an apparent rug pull, while the people behind it were not identified in the contemporary account. The project was not an authorized Netflix product. The published price rise had not meant that every holder could sell a balance at that displayed valuation.
The displayed price did not provide ordinary holders a matching exit.