You know, when you walk into a casino, there
is this this unspoken fundamental agreement between
you and the House. Right, the rules of engagement.
Exactly. I mean, you know the odds are statistically
against you. You know the House almost always
wins over a long enough timeline. But you also
know that at any given moment, you have the ultimate
power to just stand up. Yeah, you can always
leave. Right. You can take whatever chips you
have left, walk over to the cashier's cage, cash
out, and literally just walk out the front door.
The rules are incredibly clear. You might lose
your shirt. Sure. But you are never physically
or financially imprisoned by the building itself.
You have total agency. And that agency, I mean,
that is the bedrock of any financial exchange,
whether you're at a blackjack table in Vegas
or trading blue chip stocks on Wall Street. You
have the right to liquidate your position. Yeah.
The moment you remove that ability to exit, you're
no longer participating in a market or a game.
You are basically participating in a hostage
situation. Wow. a hostage situation. That is
an intense way to put it, but it brings us right
to the core of today's deep dive. So we are thrilled
to have you joining us, addressing you, the listener,
directly here as we unpack a single, utterly
fascinating source today. We are looking at the
Wikipedia article detailing the 2021 Squid Game
cryptocurrency scam. Oh, this one is wild. It
really is. Our mission today is to explore the
anatomy of a massive digital illusion. We want
to examine exactly how cultural hype, combined
with the intoxicating promise of algorithmic
wealth, completely blinded thousands of seemingly
savvy investors to massive blinking red flags.
Yeah, the red flags were everywhere. They really
were. We're talking about a scenario where people
voluntarily walked into a brightly lit, incredibly
trendy digital casino, traded their life savings
for special chips, and only realized after sitting
at the table that the cashier's cage didn't actually
exist. The exit doors had completely vanished.
So, okay, let's unpack this. Right. the basic
facts from the source. It's November 2021. And
the timeline here is critical. November 2021,
the cryptocurrency market is in the middle of
this massive historic bull run. I mean, my digital
backdrop here is just a cascading wall of rising
and falling crypto charts. And back then, everything
was just going up. Up and up. Exactly. We were
seeing mean coins, minting millionaires literally
overnight. Decentralized finance or DeFi. is
essentially the Wild West. It's operating largely
outside of traditional regulatory frameworks.
And right in the middle of this financial frenzy,
a brand new cryptocurrency called Squidcoin appears
out of nowhere. Right. Trading into the ticker
Squid Game. Squid Game. And it is aggressively
writing the coattails of the South Korean Netflix
phenomenon Squid Game, which was arguably the
most talked about piece of pop culture on the
planet at that exact moment. Oh, absolutely.
Everyone was talking about it. And the numbers
for this coin are just staggering. I mean, we
aren't talking about a token that had a modest
little run. This coin surged thousands of percentage
points in a matter of days. It was exponential.
If you look at the historical charts from that
first week of November 2021, the price action
looks like a heart rate monitor that suddenly
spikes into a sheer vertical line. It reached
a peak valuation of $2 ,861 per single coin.
Which is insane. A climb to nearly $3 ,000 a
coin for a brand new, completely unvetted project
is astronomical, even by the highly volatile
standards of the crypto space. Yeah, that's not
normal. Not at all. And to understand why people
were throwing money at this, we have to look
at the specific mechanism the developers used
to lure investors. They didn't just market this
as a fan token. They marketed it as a play -to
-earn cryptocurrency ecosystem. And the Play
to Earn model, that was the ultimate bait in
late 2021, wasn't it? Oh, it was the buzzword
of the year. Because you had other projects out
there actually paying people digital dividends
just for interacting with a platform. So the
concept wasn't entirely alien to the crypto community.
The pitch for Squidcoin was that buying these
tokens granted you access to an upcoming fan
made online game. Inspired by the lethal games
seen in the Netflix series. Exactly. The white
paper outlined this multi -level tournament to
play the first level, which was a digital version
of red light green light, you had to pay an entry
fee in squid. And if you'd advanced to higher
levels, the entry fees increased exponentially.
Right. And you might even have to purchase specific
custom NFTs just to participate in those later
rounds. It's just so clever. What's fascinating
here is the psychological hook. It creates an
artificial demand cycle. You buy the token not
just to hold it as a speculative asset like a
stock, but as an admission ticket to a game that
promises to generate even more tokens as rewards.
It's a self -feeding loop. Exactly. The developers
painted a picture of a self -saning digital economy.
The theoretical promise was that you could play
this game, accumulate massive rewards from the
entry fees of all the players who lost, and then
swap those winnings out for established cryptocurrencies
like Ethereum, or just cash them out for US dollars.
Man, it's just weaponizing cultural momentum.
I mean, thinking about it, it's like buying extremely
expensive plastic chips at a casino where the
gaming tables haven't even been built yet. That's
a great way to put it. Right. But everyone is
throwing money at the dealer simply because the
casino has a really cool trendy movie theme.
They were buying into a fantasy of participating
in a high stakes winner -take -all tournament
without any of the actual danger. Exactly. The
Netflix series is entirely about desperate people
competing in lethal children's games for a massive
cash prize. The creators of this coin promised
that exact same adrenaline rush, that same potential
for life -changing wealth, but from the safety
of a computer screen. You get to be the protagonist
of the show, risking your wallet instead of your
life. And that narrative overlap is a textbook
psychological exploit. The project successfully
mapped the emotional stakes of a fictional television
show onto a real -world financial instrument.
And because it was built on the Binance smart
chain and traded on decentralized exchanges,
there were zero gatekeepers. Anyone with a digital
wallet and an internet connection could participate.
There's no centralized authority vetting the
code before it goes live. Which brings me to
you, the listener, for a second. Think about
this. Have you ever bought something entirely
based on the fear of missing out? Oh, the FOMO
is real. Right. Maybe a concert ticket for a
band everyone is talking about, or a new piece
of tech, only to realize later that you totally
skipped over the fine print. Because the fine
print with Squidcoin was a literal financial
trapdoor. A brutal one. And here's where it gets
really interesting and honestly incredibly dark.
The entire plot of the Netflix show Squid Game
is about people trapped in a game they cannot
escape. Yeah, that's the whole premise. Once
you cross the starting line, you are locked in
until the bitter end. And yet thousands of investors
willingly poured real money into a cryptocurrency
where the central fatal flaw in its smart contract
was the absolute inability of the buyers to sell
their tokens. They were trapped. They engineered
a smart contract with what's called an anti -dump
mechanism. OK, explain that because that sounds
like a feature, not a bug. Well, it can be. In
the decentralized finance world, an anti -dump
mechanism is occasionally used by legitimate
projects. The idea is to prevent early investors
or whales from selling massive bags of tokens
all at once and completely crashing the price
for the wider community. So it's pitched as a
stabilizing feature. Exactly. But the developers
of Squee completely weaponized this concept.
They wrote the code so that purchase the coin
was totally seamless, but selling it required
holding a secondary token that they called marbles.
Marbles, which is another direct reference to
an episode of the show. Yeah. The audacity to
name the locking mechanism after the most emotionally
devastating episode of the series. But here's
what baffles me when I look at the source material.
The crypto community prides itself on the ethos
of do your own research. DYO, yeah. It's practically
their mantra. Right. So how is it possible that
investors dumped an estimated $3 .38 million
into a digital asset without someone, anyone,
running a test transaction to see if the cell
function actually worked? Well, if we connect
this to the bigger picture, it speaks directly
to the arrogance of momentum trading and the
blinding effect of exponential gains. Greed,
basically. When a chart is printing massive green
candles hour after hour, the fear of missing
out entirely overrides analytical thinking. The
line is going up so fast that if you stop to
read the smart contract code, or if you pause
to run a small test transaction, you might miss
out on a 50 % gain in the next 10 minutes. Wow!
The velocity of the price increase creates this
reality distortion field. You aren't testing
the plumbing of the exchange anymore. You're
mentally shopping for a new house based on a
fandom number on your screen. That is wild. And
I was looking at the actual red flags, the Wikipedia
page lists, and they are glaring. I mean, even
if you don't know how to read a smart contract,
the superficial warnings were everywhere. Oh,
yeah, the website was a mess. Riddled with spelling
and grammatical errors. And the developers Telegram
channel didn't allow users to post replies. Their
Twitter account had replies completely turned
off. A literal mute button. Yes. In any traditional
investment space, a company muting its own investors
is a massive, immediate deal breaker. Why did
a community that is usually so hypervigilant
about scams just ignore a literal mute button?
Because a significant portion of those buyers
likely suspected it was a highly risky play or
even a scam from the start. Wait, really? They
knew? Well, they believed they could beat it.
In the degen trading culture of 2021, there was
this pervasive belief that you could ride a hype
wave and jump off just before it crashed. They
saw the red flag, sure, but the cultural power
of the squid game brand convinced them that there
would always be a greater fool willing to buy
their bags at a higher price. Ah, the greater
fool theory. Exactly. What they failed to realize
was that the developers had already removed the
exit doors. You can't beat a rigged game if the
sell button is permanently disabled for everyone
except the house. The crazy thing about that
astronomical $2 ,861 price tag isn't just the
sheer number. It's the mechanical reality driving
it up. If thousands of people are pouring money
in and the code explicitly prevents anyone from
taking money out, the supply of available tokens
is effectively choked. Right. The supply side
is zero. So the automated market maker algorithm
has no choice but to artificially rocket the
price to the moon. It's basic math at that point.
Right. So what does this all mean? Which leads
to the obvious question. If the regular investors
couldn't hit sell, who had the master key to
the vault? because the money didn't just sit
there in digital purgatory. The climax of this
entire saga is a spectacular vanishing act. The
value of Squid HUD plummeted from nearly $3 ,000
to absolute zero. In a matter of minutes. In
minutes. Yeah. This is the execution of what
is known to the space as a rug pull. To understand
how this works mechanically, we have to look
at how liquidity pools function on decentralized
exchanges like PancakeSwap, which is where Squid
was primarily traded. Okay, break that down for
us. Sure. A liquidity pool is essentially a smart
contract containing a pair of tokens. In this
case, the worthless squid tokens and a highly
valuable established cryptocurrency like Binance
Coin or BNB. So as investors are buying into
the hype, they are sending their valuable BNB
into this digital pool. And in exchange, the
automated system is handing them the squid tokens.
Precisely. The pool is steadily filling up with
millions of dollars worth of real liquid value,
while the investors' wallets are filling up with
tokens that they are mathematically prohibited
from selling back into the pool. Now, in a decentralized
exchange, There's no corporate oversight. There's
no customer service department. The developers
who created the liquidity pool hold the administrative
keys to that specific smart contract. While they
locked the investors out of the cell function,
they retained their own administrative privileges.
Oh, man. So to use an analogy, it's like setting
up a currency exchange booth at an international
airport. OK, I like this. The scammers are running
the booth. Travelers walk up, hand over millions
of actual US dollars, and the scammers hand back
custom printed monopoly money, telling them it's
going to be the global currency of the future.
Right. The travelers take the monopoly money,
but when they try to trade it back, the tellers
refuse the transaction based on some obscure
fine print. And then the rug pull happens. The
developers use their administrative keys to invoke
a function that withdraws all the underlying
BNB liquidity from the trading pair. They just
take it all. They take all the US dollars out
of the cash register at that exchange booth,
pack it into their suitcases, and leave the monopoly
money sitting on the counter. Because the underlying
value backing the SquidBeat token was instantly
removed from the automated market maker, the
algorithm immediately repriced the Squid token
to its true value. Which is zero. Absolute zero.
The vault wasn't just emptied. The fundamental
mechanism that gave the token any perceived financial
weight was ripped out from underneath it. And
the speed of the collapse is just terrifying.
It was instantaneous. People were watching their
portfolios display millions of dollars in unrealized
gains. And by the time they refreshed the web
page, the balance was literally nothing. And
that was followed immediately by the digital
ghosting. Right. They just vanished. The source
outlines the final chilling steps of the operation.
The project's website went dark instantly. The
Twitter account was deleted. The Telegram channel
was erased. Any medium articles or promotional
materials published by the developers were completely
scrubbed from the internet. No trace left behind.
None. There was no customer service line to call
and absolute zero accountability. They packed
up the liquidity pool and vanished into the blockchain.
This raises an important question regarding the
inherent risks of these unregulated digital frontiers.
Yeah, the chaos of this unregulated space is
perfectly reflected in the aftermath, specifically
when you look at the attempts to track the stolen
funds. Good luck with that. I noticed in the
references section of the Wikipedia article,
major media outlets couldn't even agree on exactly
how much the scammers walked away with. They'd
have Forbes reporting that the founders ran away
with $2 .5 million. A CNET headline cites $2
million. Yeah, the numbers were all over the
place initially. Ultimately, the main text of
the Wikitedia article settles on an estimated
$3 .38 million based on a broader post -mortem
analysis of the blockchain. And that variance
in the reporting. Between $2 million and nearly
$3 .5 million, it really highlights the sheer
labyrinthine complexity of tracking illicit funds
in decentralized finance. And it's synonymous,
right? Well, pseudonymous. The blockchain is
a public ledger, meaning you can see the transactions
moving from wallet to wallet. But those wallets
don't have names attached to them. The scammers
don't transfer the funds to a bank account with
their name on it. Right. They route the stolen
cryptocurrency through a complex web of secondary
wallets, coin mixers and cross -chain bridges.
These are all tools designed specifically to
obfuscate the origin and destination of the assets.
It's basically a bank robbery where the police
have the security footage showing the exact moment
the money left the vault, but the getaway car
immediately splits into a thousand different
vehicles driving in completely different directions,
all with heavily tinted windows. That is exactly
what it is. And the robbers never had to step
foot in a physical jurisdiction. They exploited
a borderless, permissionless financial protocol.
When you operate entirely outside of traditional
financial systems, you are also entirely outside
of their protections. Your safety net. None.
There is no FDIC insurance to cover your losses.
There is no central bank you can call to reverse
a fraudulent transaction. The code is the law.
And in this case, the code was maliciously designed
to trap the user. So to synthesize this deep
dive for you, the squeeze saga was not a technological
failure. Not at all. It wasn't a bug in the system
or a project that simply ran out of funding.
It was a perfectly executed, highly premeditated
psychological exploit. The developers took a
beloved, massive cultural touchstone, a show
that had gripped the global consciousness, and
they weaponized its narrative. They knew exactly
what they were doing. They combined that cultural
relevance with the highly dangerous speculative
frenzy of the 2021 crypto bull run. They built
an anti -dump mechanism disguised as a feature,
locked the doors from the outside, and executed
a multimillion dollar disappearing act in broad
daylight right in front of everyone watching
the charts. And, you know, it leaves us with
a rather haunting thought to mull over. Yeah.
The architecture of this scam. perfectly mirrored
the dystopian, inescapable trap of the television
show it was named after. It really did. It is
a stunning piece of dark poetry. The creators
of Squide literally built a financial system
based on a fictional scenario where desperate,
greedy participants are ruthlessly eliminated
for the profit of an unseen VIP class. They broadcasted
their intentions right in the title. They named
their token after a lethal trap and people still
lined up to buy it. Which forces a very uncomfortable
reflection on human nature, honestly, and the
allure of exponential wealth. If a digital illusion
can be this overtly transparent about its dark
narrative, utilizing mechanics that explicitly
prevent you from leaving and still succeed to
the tune of over three million dollars. Yeah.
Are we destined to keep willingly walking into
these traps just because the flashing lights
of the jackpot look bright enough? Oh, wow. That
is a phenomenal question. It strips away all
the complex technical jargon of liquidity pools
and smart contracts and gets right down to the
raw psychology of greed. Yeah, exactly. It forces
us to ask what glaring obvious red flags we are
willing to completely ignore the moment a chart
starts glowing green. Well, thank you so much
for joining us on this Deep Dive. We hope it
gave you some fascinating insights into the mechanics
of decentralized finance, the power of cultural
hype, and the intricate anatomy of a digital
rug pull. Thanks for listening. As always, stay
curious, stay critical, and before you sit down
at any new table and buy into the hype, always
make sure you locate the exit doors before you
hand over your chips. We'll catch you on the
next Deep Dive.