Scene from Netflix's "Squid Game"
Source: Netflix
When Bernard learned of a token named after the popular South Korean Netflix series "Squid Game," which chronicles the lives of cash-strapped adults playing in a deadly tournament for a grand jackpot, he took a quick scan at Google to see if the coin was legitimate.
After making headlines, but before reading the full articles, many of which warned of some red flags surrounding the project: He decided to invest his lifetime savings of $ 28,000 in SQUID, a coin that advertised itself as a "play to win" cryptocurrency. On Monday, the token peaked at just over $ 2,860, before falling to almost zero. according to CoinMarketCap.
"My rush to buy this token is because of a single thought that came to my mind that 'Squid Game' is very, very popular now, and their token must be popular now," said Bernard, who lives in Shanghai, and asked be identified only by their first name in English because cryptocurrency trading is of questionable legality in China. "It is a tragedy. I don't know how to recoup my loss."
Bernard tells CNBC that he supports his family and is now worried about how to pay his bills.
BscScan transaction logs seem to show Anonymous token creators raised at least $ 3.4 million in investor funds. The crypto ecosystem is riddled with so-called "carpet mining" schemes in which token founders abruptly abandon their project and take investors' funds by exchanging project currency for cash.
"Squid Game Dev does not want to continue running the project as we are depressed by scammers and overwhelmed by stress," said the Squid developers. posted on Monday on his Telegram channel, which now has more than 89,000 members.
The token's white paper and website have since disappeared, although copies of its have been archived. official landing page and White paper they are still online. Twitter has temporarily restricted your account due to "suspicious activity". The creators did not respond to several emails that CNBC sent to the addresses listed on the website.
Bernard says he has contacted the FBI and SEC about his lost investment.
He has also reached out to the team behind the token, as well as Binance-owned CoinMarketCap, which listed the coin on its website, and both were "not responsible" for its loss.
Bernard, who says he has a lot of experience in crypto and computers, also blames the media for his investment in SQUID.
You are not alone. Others have taken to Twitter to say that giving oxygen to meme coins like this one works as an implicit endorsement.
"In this commercial space, everyone will rush," Bernard said, "and sometimes you feel FOMO." That feeling of FOMO, or fear of missing out, is a common sentiment among cryptocurrency traders investing in early stage altcoins, eager for a chance to get big and quick returns on their investment.
'Some have a chance to go crazy'
Saurabh Dubey has been interested in cryptocurrencies since 2016. He now works for an accounting firm in the US and in his spare time, he regularly trades new altcoins.
Just after midnight each day, Dubey watches the new coins listed on CoinMarketCap and CoinGecko, trying to identify trends based on the charts. You usually place bets of around $ 100 on coins that you think are promising on their initial price movements.
"Some have the opportunity to go crazy," he said.
Dubey says he used the winnings from a recent successful bet on another meme coin to invest $ 250 in SQUID.
"I thought he would gamble with the house money," Dubey said.
This was when SQUID was trading at about 4 cents, long before all the media hype started.
Dubey says he invested in SQUID because it was the second token on CoinMarketCap's list of the most recently listed coins.
"I picked it up because I already had a certain amount of volume and I already had a certain amount of profit, and if you look at the graph, you will see that the graph mimics the beginning of how SafeMoon started, "Dubey said, referring to an altcoin launched in March that appreciated rapidly and is still trading.
He noted that his reversal was an instinctive move more than anything else. "It was not scientific."
But then Dubey started noticing all the red flags, many of which he hoped weren't that important.
"The most important flag was that it never came down," explained Dubey. "Every coin has to fall. There is no way for a coin to go up steadily for five days ... The only thing that seemed like a fall was when it stayed at the same level."
The level of price appreciation was another major concern. "When it got to $ 1, I thought, 'Okay, 20x is reasonable. That can happen.' When it got to $ 10, that's when I started to think there was something out of place," he said.
"Most coins that actually have a product behind them can barely get to that point," Dubey continued.
Another red flag: None of the token's founders could be found on LinkedIn, plus their website and white paper were littered with grammar and spelling errors.
Ultimately, Dubey's exposure was limited, but investors like Bernard, who staked all of their savings in this coin, want the creators behind the project to be held accountable.
Bernard, who has been proactive in communicating with US authorities, says his hands are tied to take further action because he is unable to file a report with local police.
"In China, it is not so legal to trade cryptocurrencies," Bernard shared with CNBC.
