What is a ‘rug pull’? ‘Squid Game’ coin scam highlights danger for crypto investors

One of the hottest cryptocurrencies in the last week was a meme coin known as SQUID. It was based on the popular Squid Game Netflix series. It soared over 300% since its introduction last week from less than one cent to an all-time high of $2,856 per coin. And then in the last 24 hours, SQUID crashed and its creators vanished.

Vice reports that the SQUID coin appears to have been what’s known as a “rug pull” in cryptocurrency circles, noting that “the developers apparently abandoned the project and sold their tokens, making off with an estimated $3.3 million. Overnight, all social media accounts associated with the supposed game and its website disappeared.”

But just what is a rug pull? Here’s how CoinMarketCap describes it: “A rug pull is a type of scam where developers abandon a project and take their investors’ money.” But as Vice notes, the developer team behind SQUID posted on their Telegram channel on Monday that their reason for getting out of the coin was that it was being hacked and thus they did “not want to continue running the project as we are depressed from the scammers.”

As of the time of this writing, SQUID is now worth less than $0.003 per coin, according to CoinMarketCap, which now has a warning on SQUID’s listing page stating, “We have received multiple reports that the website and socials are no longer functional & users are not able to sell this token in Pancakeswap. There is growing evidence that this project has rugged. Please do your own due diligence and exercise extreme caution. This project, while clearly inspired by the Netflix show of the same name, is NOT affiliated with the official IP.”

So what’s the takeaway here? Certain cryptocurrencies can be legitimate, though volatile, investments. However, you should always be wary of meme coins that pop up overnight. Just because a meme coin skyrockets hundreds of percent in a few days doesn’t mean it will continue to do so and become the next bitcoin. If you get in at the wrong time, you could lose all of your investment.