Founder and CEO of the cryptocurrency exchange Binance, Changpeng Zhao, commented on the SQUID token scam inspired by the popular Netflix series ‘Squid Game’ and other risks for users in the decentralised finance (DeFi) space.
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In late October, unknown released SQUID as an exclusive token of the Squid Game project. It was slated that an online tournament, which would start in November, would mimic six rounds of games depicted in the eponymous series.
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Participants could be holders of SQUID and NFT released by the project NFT.
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The coin traded on the decentralised exchange PancakeSwap, and its price rose by more than 275% within the first 24 hours. This occurred amid several troubling signs, Zhao noted. Buyers who purchased the token reported that they could not sell it, and any link to the Netflix product was officially denied.
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Prices reached $2,856, and then plunged to zero — the Squid Game team vanished with users’ funds.
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Since SQUID was issued on the Binance Smart Chain (BSC), platform specialists launched their own investigation.
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Zhao confirmed that Binance’s security service together with the developers is identifying and blacklisting the attackers’ addresses, and is conducting blockchain analytics to determine their identities. The data collected will be handed over by the BSC team to law enforcement authorities in the relevant jurisdictions.
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Let me be clear: in cases like this, there is little we can do to recover funds or intervene in any way. Binance is not involved and has no control over projects built on BSC,” said the exchange’s CEO.
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In his view, the DeFi sector requires users to be able to analyse risks themselves and to possess fairly advanced technical skills. Potential vulnerabilities in smart contracts and the absence of safeguards against links to fraudulent projects pose dangers, he added. Yet the sector’s advantages clearly outweigh its drawbacks, Zhao emphasised.
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According to the head of Binance, too many inexperienced investors have entered the market recently.
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Honestly, SQUID was neither the first nor the last scam in DeFi. Over the past year more investors have entered markets for the first time than in any other I can recall. And this is not only about the crypto industry. Stock tickers regularly become top topics on Twitter,” Zhao said.
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Earlier, Crystal Blockchain specialists, at ForkLog’s request, traced the wallets of the Squid Game organisers and calculated the losses to investors.
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