The Phenomenon of Squid Game Tokens and Scams
Since the premiere of the first season of Squid Game in 2021, tokens inspired by the series began to appear in the cryptocurrency market. However, not all of these tokens are legitimate. With the recent launch of the second season of the series, there has been a proliferation of new tokens named Squid Game, raising concerns that many of these projects may be scams. According to a report from Cointelegraph, the blockchain security company PeckShield warned about several of these fraudulent tokens. The alert was issued on December 27, 2024, after identifying that many of these tokens are being controlled by a small group of individuals, suggesting that their value is manipulated and that their purpose could be a 'rug pull' or scam, where the creators sell their coins to unsuspecting investors and then withdraw all the capital, leaving buyers with worthless tokens.
The Impact on Investors and the Global Economy
Financial Losses: Investors who buy these fraudulent tokens face the risk of losing a large part of their investment. Squid Game tokens on the Base network, for example, have seen their value plummet by 99% since their launch. This type of scam not only affects individual investors but also contributes to the perception of volatility and inherent risk in the cryptocurrency market, which can discourage new participants.
Trust in Cryptocurrencies: Scams such as those related to Squid Game erode trust in cryptocurrencies and decentralized platforms. If users cannot trust that projects will be legitimate, the adoption of cryptocurrencies by people unfamiliar with the space could be limited. Trust is a key factor for the stability and growth of the crypto market, and scams only serve to undermine that trust.
Market Regulation: These frauds could accelerate pressure on governments and regulatory entities to implement stricter laws regarding cryptocurrencies. While regulation can be beneficial to protect investors, it could also slow down innovation in the blockchain and cryptocurrency space. As governments try to control the market, there is a risk of stifling the emerging technologies that are changing the global financial landscape.
Global Economy: In the context of the global economy, cryptocurrency scams can have a broader impact. The decline in trust in cryptocurrencies may affect serious blockchain projects that are driving the adoption of technologies such as smart contracts, decentralized finance (DeFi), and non-fungible tokens (NFTs). These sectors have shown the potential to transform economies and financial systems. However, frauds jeopardize this potential for growth, diverting attention from true economic opportunities.
The Squid Game Token Scam in 2021: What Happened?
The most well-known scam case involving Squid Game tokens occurred in 2021 when the Squid Game Coin token was launched to the market. This token, which gained notoriety quickly, experienced a spectacular price increase, reaching a rise of over 45,000% in just a few days. However, things took an unexpected turn when investors began reporting difficulties in selling their tokens. Some users tried to sell their tokens on PancakeSwap, a decentralized exchange, only to find out that they could not make any transactions. CoinMarketCap issued a warning, indicating that the token appeared to be a 'rug pull': the project's developers had manipulated the smart contract code, allowing them to withdraw liquidity funds, leaving investors trapped.
Regarding the affected individuals, it is estimated that thousands of investors fell victim to this scam. While exact figures are uncertain, some reports suggest that those affected lost over $3 million in total. This represents a loss close to 100% of their investment, as the coin ceased to have value almost immediately.
How to Prevent Future Scams in the World of Cryptocurrencies?
While scams are a reality in any growing market, there are strategies to minimize the risk of falling for frauds in the cryptocurrency world:
Education and Knowledge: Education about cryptocurrencies and blockchain is key to preventing fraud. Investors must understand how smart contracts, tokens, and exchange platforms work before investing. Platforms like Binance and other major entities in the crypto space provide educational resources to help users make informed decisions.
Independent Audits: Cryptocurrency projects must undergo external audits conducted by recognized security companies, such as PeckShield or Certik. These audits help identify potential vulnerabilities and prevent fraudulent manipulations.
Transparency in Projects: Cryptocurrency projects must be transparent about their team, code, and objectives. Lack of transparency is a red flag, and investors should be cautious of projects that do not offer clear or verifiable information.
Use of Trusted Platforms: Investors should conduct their transactions on trusted and regulated platforms that offer security and fund protection, like Binance, which implements advanced security measures to protect its users from scams and fraud.
Regulation: Balanced regulation can help protect investors and ensure safety in the cryptocurrency space. While regulation should not be excessive, it is essential to have standards to prevent fraud and protect user interests.