Chris Curl,
Editor
Feb. 7, 2022
Crypto is the wild west of finance. Decentralized, anonymous, and unregulated — anything goes.
As someone who believes strongly in freedom, much of this is exciting.
But it comes with risks.
In such a free environment, it’s all too easy for malicious actors to take advantage of people.
Anyone with a little coding skill can launch a token on a layer-1 blockchain such as Ethereum, Binance, or Avalanche to name a few. Many of these are scams or what is commonly referred to as “rug pulls”.
The classic crypto rug pull is a simple con job.
All you have to do is create a token on an existing blockchain, get some unscrupulous people to pump it on social media, allow the market cap to explode, and then pull all of the liquidity out making yourself millions. Hence, pulling the rug.
You might know it as a ‘pump and dump’.
A recent and obvious example of this was the Squid Game token. A group of nefarious actors capitalized on the popularity of the Netflix series, Squid Game, by launching an identically-titled coin on the Binance Smart Chain (a source of many scam coins).
It was marketed as a “play-to-earn cryptocurrency” that would allow people to use the token in online games. This is often done to earn in-game items and tokens that can be exchanged for other digital assets.
There were many tell-tale signs that this was a scam...
- First, this token had absolutely no connection to Netflix or the original South Korean series after which it was named.
- Second, people were reporting that they were unable to sell their Squid tokens after purchasing them.
- And third, their website was riddled with spelling and grammatical errors, and their dev team was totally anonymous.
Nothing pointed to this being in any way legitimate. But people are greedy. And the crypto space is filled with gamblers.
People started buying into the Squid Game Token scam.
What was once just a few cents rocketed up to $1.00. Then $2.00. And then $5.00 and higher.
Of course, a lot of this price action was the result of people not being able to cash out their tokens.
But early investors didn’t want to hear about that. They were mesmerized by their rapid gains.
Squid Game quickly reached $600 per token. Investors watched in jubilation as it climbed all the way to $2,861.
That’s when the party ended.
At 1:38 pm UTC on November 1, the creators of Squid Game yanked all $3.36 million invested out of the project. The coin was trading at less than a penny. No one knew what had happened or who to blame.
The party was over.
This story highlights the many dangers in the cryptocurrency space. Especially with many of these very small market cap meme coins. It’s important to remember that there is a high risk/reward profile whenever you invest in a project in its infancy.
These small market cap tokens can only be purchased on decentralized exchanges like Pancakeswap or Uniswap.
I’ll be showing members of Crypto Cycle how to purchase these tokens but will remind them to understand the risks. I view most of these tokens as gambling opportunities – not sound investments.
This week we’re deploying capital into solid projects with a clear future. Ones that are also listed on major exchanges.
Membership is now open.
You can sign up here to get access to our $50,000 real-money portfolio.