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Binance, the world’s largest crypto exchange, says it is investigating the Squid Game token debacle, aiming to recover lost funds and turn over its findings to law-enforcement officials.
The “play-to-earn” token, SQUID, rocketed more than 70,000% last week, to $2,861, before crashing to fractions of a penny on Monday. Owners of the token had no way to sell as liquidity froze up. The token has no official affiliation with the hit
Netflix
series.
It now appears to have been a pump-and-dump or “rug pull” scheme, according to Binance, the company that developed the underlying blockchain used by PancakeSwap, one of the largest decentralized exchanges, or DEXEs.
“These types of scam projects have become all too common in the DeFi space,” a spokeswoman for Binance told Barron’s.
Binance said that it had frozen and blacklisted wallet addresses associated with the developers of SQUID, and that company is “deploying blockchain analytics to identify the bad actors.”
The token’s developers appear to be using a “coin mixer” called Tornado Cash to cover their tracks, Binance said. “Our security team is currently tracing those funds,” the exchange told Barron’s.
Tornado Cash’s developers could not be reached for comment.
Binance said it was trying to trace the transactions and plans to hand over its findings to law enforcement in the “appropriate jurisdiction.” But there’s little the company can do to recover lost funds.
Developers of the token may have walked away with at least $3 million, according to the website Gizmodo. It is not known who the developers are.
The origins of the SQUID token aren’t clear. The developers of the token are anonymous. A
Twitter
account and website associated with it have gone dark.
On Monday, a post claiming to be from the developers said that they had quit the project.
“Squid Game Dev does not want to continue running the project as we are depressed from the scammers and are overwhelmed with stress,” said the post from Squid Game BSC on the Telegram messaging polatfirm. “Sorry again for any inconvenience been made for you.”
Crypto experts call the whole thing a “rug pull.” In such a case, developers launch a seemingly legitimate token, build support for it, and then vanish or abandon the project, leaving…
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