How did SQUID crypto creators rugged the investors? Everything you need to know about rug-pulls

Squid crypto developers ran away with more than $3.4 million. Rug pulls remain a dark side of crypto. Here's everything you need to know on how to spot crypto rug-pull scams.

 

Key Takeaways

  • Rug pull is one of the newest ways to get scammed. The developer or creator of a project scams the investors and runs away with their money.

  • More than 43,000 people invested in the SQUID token and were scammed in the rug pull. The makers ran away with more than $3.4 million.

  • It is important to perform due diligence and thorough background checks to look for the signs of the project whether it is legit or not.



On October 26, 2021, Squid Game crypto token SQUID was launched on the PancakeSwap decentralized platform. The initial token price was one penny per token. On November 1, the price per SQUID token skyrocketed to $2856.64 which was nearly a 300% surge from the initial price. Within 24 hours, the price dropped abruptly to nearly a fraction of the cent. The makers of the token simply vanished without leaving a trace. It was the biggest rug-pull scam of the year.


The SQUID token was inspired by the latest South Korean Netflix hit series the “Squid Game”. More than 43,000 people invested in the token and were scammed in the rug pull. The makers ran away with more than $3.4 million.


What is a rug pull?

The cryptocurrency market is an evolving industry. It is a decentralized network that allows millions of crypto enthusiasts, creators, and designers to launch their projects and applications. While this market has unbound opportunities it also comes with limitations. Scammers always look for a way to infiltrate this market and earn some quick money. Rug pull is one of the newest ways to get scammed. It is a slang word used in the crypto world. Getting “rugged” or “rug-pulled” means you are being scammed. The developer or creator of a project scams the investors and runs away with their money. They leave no trail. Suddenly the entire company or project vanishes and the investors are left with nothing.


How did $SQUID crypto rugged their investors?

On October 26, the SQUID cryptocurrency inspired by the popular Netflix series “Squid Game” was launched at just one dollar. On Friday, October 30th, the token value rose to $4.39 which is a significant rise. On November 1, the token jumped to $2,862, and suddenly within one day the token price sunk to nearly zero leaving thousands of investors weeping for their money. The creators of the token who remain anonymous to date sold their tokens and walked away with a hefty sum of $3.4 million.


Crypto investigators blamed the investors for putting so much faith and money without doing a proper investigation. They also believe that gamers were followers of the virtual Squid Game that inspired them to buy the token.


The anonymous creators of the SQUID token released a whitepaper during the launch of the token which was erroneous and there were certainly hints of loose ends which the investors ignored. The scammers also adopted the name from the popular movie to allure investors to buy this pay-to-earn token. They advertised on their official Twitter account and social media but all the accounts suddenly froze after their exit.


Tell-Tale signs of rug-pull scams

  • The white paper was erroneous.

  • The creators were anonymous.

  • The token price skyrocketed within a very short time.

  • The token was not released on popular crypto exchanges.

  • The token sale was locked.

  • The site was not officially affiliated with the Netflix IP.

  • The social media accounts disappeared overnight.

  • Unusual activity was noticed on the wallets of the investors.

  • The creators cashed out and vanished overnight without leaving any trail.

  • Lack of proper financial reports to vouch for its transparency and security.

How to avoid getting rug-pulled in crypto scams?

Unfortunately, the crypto market is full of scammers. To avoid rug-pulls in the future here are a few tips:


1) Check the background. Do a proper background check of the creators of the project. Are they listed on any known crypto community or are they simply anonymous? Do due diligence and learn about the project. Read the whitepaper and look out for loopholes. New DeFi projects generally come with innovative ideas, applications, and technologies. Do they use a known reputable exchange platform? See whether the founding team is listed in a reliable and noteworthy decentralized exchange.


2) Are the returns too high? Scammers generally inflate the project and make huge promises to bring in more investors. Look for signs such as their partnership with credible DeFi projects or the exchanges where they are operating.


3) Do not trust anonymous creators. It is a red flag because it is very difficult to track the investors and know their whereabouts.


4) Liquidity pool. Check the liquidity of the project. Good projects have sound liquidity which is locked up for some duration. During this time, the liquidity cannot be withdrawn. If the liquidity pool is open and not locked up, there are chances that the creators may withdraw and run away with the money of the investors.


Evaluate the credibility of the project before investing

With the growing popularity of crypto, scammers are looking for avenues and ways to cheat unsuspecting crypto users. Rug pulls generally are colored with high expectations and future promises that allure the investors. So, before venturing into the market, it is advisable to do proper research on the team executing a new project. Learn about their plans, track records, market history, and evaluate their credibility.