'Squid Game' cryptocurrency turns out to be a scam, creators run off with millions

Another day, another cryptocurrency scam.

But SQUID had a twist.

The cryptocurrency was based on the hit Netflix series Squid Gameand received a slew of mainstream press coverage as a result.

Alas, early this morning, as the crypto peaked at more than $2,800, the anonymous creators of the cryptocurrency decided to cash in. They sold off their holdings, shut the project's website down, and made off with millions. Because the founders held the vast majority of SQUID, their sell-off tanked the value of the coin, rendering it worthless.

SQUID launched with a pre-sale on Oct. 20, priced around just over a penny. SQUID's price skyrocketed throughout the past week, hitting close to $40 over the weekend.

How much is SQUID worth now, after its founders pumped it into the thousands and then sold it off? It's currently sitting around $0.005. Even the pre-sale buyers, who purchased it at its lowest price, lost money.

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Again, this is not new in the cryptocurrency world. The scam is commonly known as a "rug pull."

A rug pull is when the developers behind a new coin pump it as quickly as possible with the intent to immediately cash in their large holdings. With no more liquidity, the crypto tanks and everyone else's investment becomes worthless. The developers basically run off with investors' money.

Mashable has coveredrug pulls before, specifically the large number of social media influencer-promoted crypto scams that took off over the summer. However, SQUID was able to generate a lot of mainstream press coverage, something even most of the influencer-backed crypto scams failed to do.

As Gizmodopoints out, news outlets such as CNBC, Forbes, BBC, Fortune, and Business Insider, all ran stories last week about SQUID. "Squid Game cryptocurrency rockets in first few days of trading" read BBC's headline. "'Squid Game' crypto is up more than 86,000% in a week" said Fortune's.

While most coverage did mention some red flags, it was often tucked away several paragraphs down in the piece. The average retail crypto investor is looking to get rich quick, and may have purchased SQUID after just reading the headlines.

To those who have seen rug pulls before, however, SQUID was always an obvious scam. Its domain "SquidGame.cash" was registered shortly before launch. The use of Squid Gamewas completely unauthorized and it had no official connection with Netflix. Its social media channels, on services such as Twitter and Telegram, restricted users from replying or even taking part in a conversation.

Cryptocurrency price-tracker CoinMarketCapeven warned users right on the listing that investors were having trouble selling their SQUID for real money.

In fact, this wasn't a bug. This was a feature. The anonymous founders said they had built an anti-sell-off mechanism into the cryptocurrency. It was sold to users as a way to stop large investors from pumping and dumping the coin on their own. If users really wanted to cash in, they had to invest in another cryptocurrency called Marbles token, which they could then swap with SQUID to sell. As investors attempted to do this, the trade-in price to swap SQUID for Marbles quickly became a loss.

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And if you're wondering what happened with Marbles...it also turned out to be a rug pull. Its price was pumped and dumped this morning and its website has been taken offline.

SQUID wasn't a case of a bad investment. It was a scam from the get-go. One that major media outlets carelessly promoted.

While a second season of Squid Gamehasn't officially been announced yet, there is a good chance we'll see more crypto scams like SQUID in the future.

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