By
Chimamanda U. Martha
April 19th, 2024
Even with the Squid Game token crumble and the challenges on DeFi platforms, investors remain unshaken.
The world’s largest crypto exchange Binance said it is investigating the sudden Squid token crash and aims to recover the lost funds. The crypto asset, inspired by the Korean Netflix hit Squid Game, crumbled to fractions of a penny earlier this week after surging over 70,000% to $2,861 last week. A Binance spokesperson said the exchange had begun its investigation on the Squid token debacle. The spokesperson also added that Binance considered SQUID a scam.
Binance Launches Investigation on Squid Crypto Crash
According to Binance, the crypto project seems to be a “rug pull” scheme as the token developers have left the project after the token price crashed to nearly zero. A post from Squid Game BSC on Telegram said:
“Squid Game Dev does not want to continue running the project as we are depressed from the scammers and are overwhelmed with stress. Sorry again for any inconvenience been made for you.”
The Binance representative said that the company has frozen and blacklisted all the addresses affiliated with the developers. In addition, Binance will further leverage blockchain analytics to investigate the SQUID crash and identify the bad actors. Upon the completion of the investigation, the crypto exchange said it would submit its findings to law enforcement agencies in the appropriate locations.
It appears the token’s developers are using Tornado Crash to cover their tracks. However, Binance stated that its security team is currently tracing the funds.
The SQUID protocol is built on Binance Smart Chain (BSC), which is an open-source ecosystem. Hence, the exchange company does not have supervision over projects developed on the network.
Growing Thefts on DeFi Exchanges
DeFi platforms have now become a home for scammers, causing crypto investors to lose their funds. CipherTrace revealed that investors lost over $680 million to thefts, scams, hacks, and other malicious acts between January and July 2021. About $471, representing 76% of the total, happened on DeFi exchanges out of the lost funds. Separately, rug pull losses, similar to the SQUD debacle, were about $113 million in the same period.
Furthermore, the Binance rep spoke on the growing projects scam in the crypto space.
“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.”
At the same time, the US regulators are showing concerns about the growing thefts on DeFi platforms. A recently-released report on Stablecoins by the White House highlighted the risks associated with DeFi. The report also mentioned that regulators are working on how to control them.
Even with the Squid Game token crumble and the challenges on DeFi platforms, investors remain unshaken. The total value locked in DeFi networks and on PancakeSwap continues to increase.
Some other Squid Game-inspired tokens like Squidanomics, Squid Dap, and Baby Squid Game have also popped up.