Crypto fraud incidents on the rise

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November 14, 2021

It seems it was only yesterday that Bernie Madoff was sent to jail for his role in perpetrating a Ponzi scheme of incomprehensible size. Although the “investors” came from very different backgrounds and demographics, they were all determined to continue to outperform the market by using a vehicle that was truly “too good to be true”. The next wave of these dubious investments with astronomical potential is coming from the cryptocurrency world.

The popularity of meme pieces has exploded recently and often follows pop culture. Elon Musk touted the DOGE piece when it appeared on Saturday Night Live earlier this year. More recently, the crypto world has seen the ebb and flow of a new coin, the Squid Game Coin (SQUID). SQUID is the most recent example of opportunists exploiting both the fear of missing out and the popularity of the hit Netflix series Squid Game.

SQUID, which is not affiliated with the official Netflix game IP Squid, was introduced to the market in late October. On Monday, November 2, SQUID hit a one-day trading price of $ 2,860. The next day, the coin was trading close to $ 0, amid allegations that the founders traded their SQUID coin for silver. Among the SQUID anomalies was the fact that in its first run, the coin did not experience a drop from its high. Typically, when a crypto coin starts to take off, early investors look to liquidate some, but not all, of their holdings to cash out while fervor is high. This dip never happened with SQUID, and it hit $ 1, then $ 10, soon after its initial surge.

The next wave of these dubious ‘too good to be true’ investments with astronomical potential is coming from the cryptocurrency world.

CoinMartketCap, which tracks crypto prices and trading volume, raised the red flag following the drastic price increase. Investors alleged fraud and noted that SQUID’s website and social media accounts were either down or disabled. Subsequently, users were unable to sell their SQUID crypto on the Pancakeswap token exchange, a popular marketplace for even coins.

Surprisingly, the following weekend, SQUID’s market price rose to $ 0.65, about 817% above its Friday low, and a mere fraction of its previous Monday’s $ 2,860 high. . The takeaway from SQUID is that, despite the fast paced nature of crypto, it is always prudent to do your due diligence before investing. No major cryptocurrency is flawless, not even Bitcoin, which is currently trading at around $ 65,000. Bitcoin has had its share of controversy, including the locking up of early innovators for money laundering, a hack into one of the biggest bitcoin exchanges, and the simple fact that the bitcoin “innovator” cannot be identified. , among others.

SQUID may very well end up being characterized as a Ponzi scheme. While the fraud vehicle is different, the outcome is the same and those who entered the game on the later dates were the most affected. It is important to understand that crypto is inherently volatile. As a result, and as with all cryptocurrencies, tokens, NFTs, etc., it is important to take the time to analyze and investigate, understand the risk, use a reputable token exchange and keep going. to monitor the activity of the room in real time. because it continues to evolve.

Note: My colleague Dan Dawson has written a series of articles describing the impacts of crypto in the energy and construction sectors, as well as an overview of cryptocurrencies. These articles are available here.

This publication presents the views, thoughts or opinions of the author and not necessarily those of HKA. While we take every precaution to ensure the accuracy of this information at the time of posting, the content is not intended to address all aspects of the subject matter referred to, should not be relied upon and does not constitute not advice of any kind. This publication is copyright © 2021 HKA Global Ltd.

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