The Squid Game token has no official affiliation with the hit Netflix series.
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Binance, the world’s largest crypto exchange, said it is investigating the Squid Game token debacle, with the aim of recovering lost funds and reporting its findings to law enforcement.
The “play to win” token, SQUID, soared over 70,000% last week to $2,861 before crashing to fractions of a penny on Monday. Owners of the token had no way to sell as liquidity froze. The token has no official affiliation with the hit
netflix
series.
According to Binance, the company that developed the underlying blockchain used by PancakeSwap, one of the largest decentralized exchanges, or DEXE, it now appears to be a pump and dump system or “ carpet pulling”.
“These types of scam schemes have become all too common in the DeFi space,” a Binance spokesperson said. Barrons.
Binance said it has frozen and blacklisted wallet addresses associated with SQUID developers, and that the company is “deploying blockchain analytics to identify bad actors.”
The token’s developers appear to be using a “coin mixer” called Tornado Cash to cover their tracks, Binance said. “Our security team is currently seeking these funds,” the exchange said. Barrons.
Tornado Cash developers could not be reached for comment.
Binance said it was trying to trace the transactions and planned to turn over its findings to law enforcement in the “appropriate jurisdiction”. But there is little the company can do to recover the lost funds.
The token’s developers could have walked away with at least $3 million, according to the Gizmodo website. We don’t know who the developers are.
The origins of the SQUID token are unclear. The developers of the token are anonymous. A
Twitter
the account and website associated with it have gone dark.
On Monday, a message claiming to be from the developers said they had left the project.
“Squid Game Dev does not want to continue running the project as we are depressed by scammers and overwhelmed with stress,” said Squid Game BSC’s post on telegram messenger polatfirm. “Sorry again for any inconvenience caused to you.”
Crypto experts call it all a “rug pull”. In such a case, developers launch a seemingly legitimate token, create support for it, and then disappear or abandon the project, leaving holders with a worthless digital asset.
SQUID primarily trades on PancakeSwap. It is known as an automated market maker because it is basically a set of algorithms, or smart contracts, that set the prices and terms of a trade. Liquidity is provided by the community of users, who also participate in the governance of the system.
Anyone can throw a token on a DEX and try to create a market for it since the system runs on open-source code and is considered “permissionless” – with no central oversight or listing requirements. DEXs generally have no listing standards or requirements, acting as utilities for crypto traders.
PancakeSwap runs on the Binance “smart chain”, an Ethereum-like blockchain that is used for a variety of decentralized finance, or DeFi, applications. The PancakeSwap platform has a development team behind it. But the owners of the CAKE governance tokens vote on proposals for managing the system, “letting the community have a say in how PancakeSwap develops in the future,” according to the site. Barrons could not contact the development team.
Theft is a growing problem on DeFi platforms. Crypto investors lost more than $680 million due to thefts, hacks and other malicious activity in the first seven months of 2021, according to CipherTrace, a blockchain analytics firm. About 76%, or $471 million of the total, occurred on DeFi exchanges. Carpet draw losses totaled $113 million through July.
The decentralized structure of DEXs leaves investors with little recourse if something goes wrong. As PancakeSwap states on its site, “There is NO customer support for PancakeSwap”. The site advises traders to contact the community via Telegram if they have a problem.
Despite the crash of the Squid Game token, crypto traders seem undeterred by the risks of DEXs and other DeFi platforms. The total value locked in DeFi networks rose 2.6% in the past 24 hours to $253 billion, according to DeFi Llama, a site that tracks the industry. The total value on PancakeSwap has increased by 12% in the last seven days, reaching $6.2 billion.
US regulators report growing concern over DeFi platforms. A White House report on stablecoins, cryptos designed to maintain a value of $1, released on Monday highlighted the risks of DeFi, indicating that regulators are actively seeking to control them.
As for the SQUID token, it is not entirely dead. The token was trading on PancakeSwap on Wednesday, according to CoinMarketCap. Several other Squid game-related tokens also appeared, including SquidDao, Squidanomics, and Baby Squid Game.
Netflix has no involvement in Squid-related cryptos. Buyer beware.
Write to Daren Fonda at [email protected]
