Binance Is Now Investigating the Squid Game Crypto Scam

Binance Is Now Investigating the Squid Game Crypto Scam
Photo: MOHD RASFAN / AFP, Getty Images

Crypto exchange Binance has announced that it is investigating SQUID, the Squid Game-themed cryptocurrency, and will turn over whatever information it uncovers to the appropriate law enforcement agency.

The news comes shortly after the token experienced a meteoric rise and swift market crash that saw investors lose millions of dollars — a surefire sign that the whole thing was a giant fraud.

“Our security team has launched an investigation – as a gesture of goodwill – and is exploring options to support the community,” said a Binance spokesperson, when reached for comment by Gizmodo. They added that they would be “blacklisting addresses to prevent withdrawals from Binance accounts linked to the scam and deploying blockchain analytics to identify the bad actors.”

“The Binance Investigations Team will be providing their findings to law enforcement in the appropriate jurisdiction,” they said.

SQUID launched less than two weeks ago and quickly drew immense interest — skyrocketing over 2,000% in market value in a matter of days. The token is, of course, based on the hit Netflix show, which is set in South Korea and involves a sadistic “battle royale” wherein debt-ridden participants play lethal kids’ games for a chance to win billions of won (Korea’s currency).

The coin’s protocol was built on the Binance Smart Chain (BSC) and was launched by unknown developers who promoted it by putting out a poorly written “white paper” as well as a constellation of social media accounts designed to push the coin.

About a week ago, Gizmodo pointed out that SQUID was obviously some sort of scam. The fact that investors could put money into the coin but couldn’t get any money out again was the most obvious sign of shadiness. A few days later, the whole thing collapsed in what appeared to be a classic “rug pull” — a type of exit scam wherein developers of a crypto project will suddenly abandon it and elope with investors’ money.

The coin hit a market zenith of some $US2,860 ($AU3,864) on Monday, then subsequently plummeted to zero. Afterward, several of the coin’s social media accounts went dead and the developers put out a statement on Telegram claiming they were stepping back from the project. They appear to have made off with some $US3.4 ($AU5) million in investor funds.

Fairly appropriate that a coin named after a show about the ills of unchecked capitalism turns out to be a cash-guzzling scam. The collapse reportedly led to gargantuan losses for investors — including one guy who allegedly lost his $US28,000 ($AU37,825) life savings.

CoinDesk originally reports that Binance had decided to investigate SQUID. Representatives for the crypto exchange also told Gizmodo that its users should be wary of projects that are new and “high-risk.”

“These types of scam projects have become all too common in the DeFi space as speculative crypto investors seeking the next ‘moon shot’ are quick to invest in projects without doing the appropriate due diligence,” the Binance spokesperson said. “Speculators seeking potentially unrealistic, high-risk “lambo” or “moon shot” opportunities should be wary of the risks of investing in new or unverified assets, whether in crypto or the securities markets.”

In what seems like a potential metaphor for cryptocurrency writ large, the fact that SQUID has crashed and is now visibly being investigated as fraud has not deterred droves of people from wanting to invest in it. Newsweek reports that, as of Thursday morning, people were still furiously Googling how to buy the coin, even though it’s not clear there’s anything left to invest in. Bafflingly, the cryptocurrency market index CoinMarketCap shows the value of the Squid Game coin has surged by 664% while warning that users can’t sell it and it’s an obvious scam.