According to the Logical Indian, there was a #SquidGame Cryptocurrency that led to millions in losses for investors:
A cryptocurrency inspired by the popular South Korean Netflix series Squid Game on November 1, 2021, became the most hyped digital token when its valuation shot up to $2,861 per coin. Squid coin, which marketed itself as a "play-to-earn cryptocurrency", had seen its price soar – surging by thousands of per cent. The cryptocurrency peaked at $2,861 before plummeting to $0, according to the website CoinMarketCap. This is commonly called a "rug pull" by crypto investors; it’s an event that is triggered because the creators of the crypto quickly cash out their coins for real money, draining the liquidity pool from the exchange. "Rug pulls happen when there are large holders of the coin who can freely trade it, and the market for that token is not deep or highly liquid." Squid’s developers have made off with an estimated $3.38million (£2.48million); according to technology website Gizmodo, it had also pointed out numerous signs that the coin offering was a scam, including its (now disappeared) website being filled with spelling errors. CoinMarketCap also warned potential investors that SQUID was probably a scam, displaying a warning to "exercise extreme caution" if they bought the crypto, but that didn’t stop mainstream news outlets like the BBC, Yahoo News, Business Insider, Fortune, and CNBC from running headlines about how the new Squid Game cryptocurrency had soared by 83,000% over just a few days.
Today we are going to talk about, among other things, the many scams that exist within the De-Fi space. This is not uncommon when you witness the advent of a new and fast growing financial market.
According to the New York Daily Post, De-Fi scams are quite common, which is likely going to lead to more regulation from the SEC, FINRA and others:
Cyber crooks have made off with more than $12 billion in stolen funds through decentralized finance scams so far this year, an increase of more than 600 percent from last year, according to a new analysis.
Decentralized finance platforms, popularly known as DeFi, have been hailed by enthusiasts as the future of a global financial system that doesn’t rely on banks or other central organizations.
But the nascent industry remains largely unregulated and as it boomed earlier this year along with the surge in cryptocurrencies, fraud was quick to follow, according to Elliptic, which tracks movements of funds on blockchain networks.
“The DeFi ecosystem is an incredibly exciting and fast-moving space, with financial services innovation happening at light speed,” Elliptic’s chief scientist Tom Robinson said in a statement.
“This is attracting large amounts of capital to projects that are not always robust or well-tested. Criminal actors have seen the opportunity to exploit this.”
The total funds circulating among DeFi services has spiked from just $500 million in November 2019 to a whopping $247 billion now, according to Elliptic.
Elliptic’s report said that mistakes in the design and development of decentralized apps are the most common cause of fraud, while some $1 billion in losses this year have resulted from so-called exit scams or “rug pulls” in which the developers intentionally steal the funds deposited, like what happened earlier this month with the “Squid Game” cryptocurrency.
The DeFi industry is still in its infancy, or as Robinson put it, “at the experimental stage,” and investors still face “significant risks.”
Representation of Bitcoin is seen with binary code displayed on a laptop.
As DeFi is still in early stages, there is still a high risk to investors.
“As the technology matures and becomes better-regulated, losses will fall and DeFi will become a practical alternative to the banks, asset managers and exchanges that we currently rely upon,” he added.
The boom in DeFi fraud comes as the value of nearly all cryptocurrencies has soared this year. Bitcoin, Ethereum and even much smaller cryptos have become hugely valuable, minting new billionaires and gaining support from a handful of institutional investors.