Luke Hartford was first tipped off to the new, rising cryptocurrency thanks to a reply guy. The tweet was nestled under a post by Carl Martin, a Swedish cryptocurrency analyst and YouTuber, on October 27. Martin was discussing the price of the Shiba Inu alt coin, which he believed could fall to zero.
It was there that Hartford, a structural engineer from Sydney, Australia, read a tip from a user by the name of @jonhree112 that alerted him to the latest cryptocurrency on the rise. Its price had increased 1,000 percent and was looking like it had headroom for 200 percent more. At the time, the price of each coin was 72 cents. “Better buy before $1.00,” wrote @jonhree112.
Hartford was an experienced crypto trader, having been involved in the world since 2017. He had seen the meteoric rise of Shiba Inu, an apparent joke meme coin that had enjoyed a 900 percent rise in under a month, muscling its way into the top 10 cryptocurrencies in the world in the process. And he saw the Squid Game coin capturing the zeitgeist in a similar way. He wanted to get in on the ground floor. So on October 28 he bought in.
Whatever misgivings he had were quelled by the rising price of the coin: The Squid Game coin kept surging and drew the attention of major news outlets like the BBC, CNBC and others, who reported uncritically on its incredible rise. “Media coverage failed to point out that there was no official tie-in with the Netflix series, thus providing an unwarranted veneer of respectability,” says Wooller. “More responsible media coverage is required; those of us who work in the industry often despair at some of the mistruth, rumor, and downright drivel often published about crypto.”
Hartford decided to buy $50 in marbles on October 31 as an experiment to see if there was a way to get his money out. Hartford’s initial $300 investment was worth $200,000 as the Squid Game coin rose to $600 per token. It’d eventually rise to a peak of $2,861, which would make Hartford just short of $1 million. In theory. In reality, the whole thing was a scam. And Hartford was just one of its many victims.
Just after 1:38 pm UTC on November 1, $3.36 million that had been invested into Squid Game coin was yanked out of the project by its creators. The liquidity pool in the exchange disappeared in an instant, and within 10 minutes the coin was almost worthless, trading at one-third of a cent.
“Anyone can spin up a token and liquidity pool, so it is a common risk for new projects run by anons,” says Patrick McCorry, CEO of PISA Research and formerly an assistant professor in cryptocurrencies and security engineering at King’s College London.
Hartford realized it was too good to be true when he started reading more and more tweets about it. The fact that the chart never once moved downwards, instead constantly going up, was another giveaway. Yet he’s not angry about the uncritical coverage of the coin’s rise, nor about the $300 he lost. “To me, crypto is about a free market without regulation,” he says. “I don’t think people who want deregulation can complain when things like this happen. You live by the sword, you die by the sword. That’s crypto.”
The project’s owners did not respond to a request for comment sent to a support email contained within the white paper produced to promote their project. But the Squid Game coin scam isn’t the first time investors have realized they’ve been fleeced as coin creators abscond with their funds. One notable recent example among many saw the creator of SushiSwap, another highly touted token, disappear with $13 million in September 2020 in what investors feared was a “rug pull.” The creator ended up returning the coins after an outcry, but then disappeared soon afterward.
“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,” says McCorry.
The way the Squid Games coin scam worked is simple, as far as crypto goes. It takes advantage of the liquidity pool that exists between the Squid tokens issued and commensurate tokens (BNB tokens) issued by Binance, the cryptocurrency exchange. The team behind the Squid Games coin issued their tokens and held the majority of the supply. That allowed them to transfer the value of the Squid Games coins into BNB tokens, which they then stole away. The theft is public, but the scammers used a mixing and tumbling service called Tornado Cash to try to obscure their tracks. “If you own so many tokens, then you can essentially just perform trades that take all BNB out of the pool,” says McCorry.