Binance, one of the world’s largest cryptocurrency exchange by trading volume, according to a CoinDesk report, is investigating the SQUID token crash and considers it a scam. CoinDesk quoted a spokesperson for the company.
The spokesperson explained that Binance is exploring options to help those harmed, including “blacklisting addresses affiliated with the developers and deploying blockchain analytics to identify the bad actors.”
The play-to-earn SQUID protocol is built on Binance Smart Chain (BSC), but Binance emphasized that BSC is an open-source ecosystem and so the company does not have oversight over projects built on the network.
What you should know
A Squid Game token going by the ticker, ‘SQUID’, which was inspired by the popular Netflix hit series, surged more than 230,000% in the past week to trade as high as $2,861.80, according to coinmarketcap, lost its entire market capitalization as the token traded less than half a cent.
According to Binance, the Binance Smart Chain-based gaming token is suspected to be a rug pull as token holders were unable to sell their tokens after they purchased it. Binance determined the developers had used a coin mixer called Tornado Cash to obfuscate their transactions.
The Binance spokesperson stated that the company will also provide their findings to law enforcement officials in the appropriate jurisdiction. The spokesperson added, “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.”
Binance is exploring options to assist those who bought the token and lost out in the crash. It is reportedly blacklisting addresses affiliated with the developers and using blockchain analytics to identify bad actors. It hopes to recover lost funds, although this seems a relatively remote possibility.
Despite all that’s happened, some extremely optimistic users are still buying the token in hope of a resurrection, with the price surging 555% in the past 24 hours. SQUID traded 9.5 cents as of the time of this writing.
Investors are always advised to DYOR an acronym in the cryptocurrency world which stands for Do Your Own Research. These types of fraudulent projects happen all the time in the cryptocurrency world and we will see many more of its type. Also, investors are advised to avoid projects with “anti-dumping technology,” because once you purchase the token, you will be unable to sell, irrespective of how the price appreciates.