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Binance says it’s investigating SQUID crypto crash

The Squid Game token has no official affiliation with the hit Netflix series.

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Binance, the world’s largest crypto exchange, said it was investigating the Squid Game token debacle, with the goal of recovering lost funds and reporting its findings to law enforcement.

The “play to win” token, SQUID, climbed more than 70,000% last week to $ 2,861 before collapsing to fractions of a dime on Monday. The owners of the token had no way to sell as liquidity froze. The token has no official affiliation with the hit


Netflix

series.

According to Binance, the company that developed the underlying blockchain used by PancakeSwap, one of the largest decentralized exchanges, or DEXE, it now appears to be a pump and dump system or ” carpet pull ”.

“These types of scam projects have become all too common in the DeFi space,” a Binance spokesperson said. Barron.

Binance said it has frozen and blacklisted wallet addresses associated with SQUID developers, and that the company “is deploying blockchain analytics to identify bad actors.”

The developers of the token appear to be using a “coin mixer” called Tornado Cash to cover their tracks, Binance said. “Our security team is currently seeking these funds,” the exchange said. Barron.

The developers of Tornado Cash could not be reached for comment.

Binance said it is trying to trace transactions and plans to report its findings to law enforcement in the “appropriate jurisdiction.” But there is little the company can do to recover the lost funds.

The developers of the token could walk away with at least $ 3 million, according to the Gizmodo site. We don’t know who the developers are.

The origins of the SQUID token are unclear. The developers of the token are anonymous. A


Twitter

the account and website associated with it went dark.

On Monday, an article claiming to be from the developers said they had quit the project.

“Squid Game Dev doesn’t want to continue running the project because we are depressed by the crooks and overwhelmed with stress,” Squid Game BSC’s post said on the Telegram messaging platform. “Sorry again for any inconvenience caused to you. “

Crypto experts are calling it a “stack draw”. In such a case, the developers launch a seemingly legitimate token, build a medium for it, then either disappear or abandon the project, leaving the holders with a worthless digital asset.

SQUID primarily trades on PancakeSwap. It is known as an automated market maker because it is basically a set of algorithms, or smart contracts, that set the prices and terms of a trade. Liquidity is provided by the community of users, who also participate in the governance of the system.

Anyone can throw a token on a DEX and try to create a market for it, as the system runs on open source code and is considered “unauthorized” with no central oversight or listing requirements. DEXs generally do not have any standards or listing requirements, acting as a utility for crypto traders.

PancakeSwap operates on Binance’s “smart chain,” a blockchain like Ethereum that is used for a variety of decentralized finance, or DeFi, applications. The PancakeSwap platform has a development team behind it. But the owners of the CAKE governance tokens are voting on proposals to run the system, “letting the community have a say in how PancakeSwap develops in the future,” according to the site. Barron could not contact the development team.

Theft is a growing problem on DeFi platforms. Crypto investors have lost more than $ 680 million to theft, hacks and other malicious activity in the first seven months of 2021, according to CipherTrace, a blockchain analytics company. About 76%, or $ 471 million of the total, occurred on DeFi exchanges. Carpet losses totaled $ 113 million through July.

The decentralized structure of DEX leaves investors with little recourse in the event of a problem. As PancakeSwap states on its site, “There is NO customer support for PancakeSwap”. The site advises traders to contact the community through Telegram if they have a problem.

Despite the Squid Game token crash, crypto traders don’t seem daunted by the risks of DEX and other DeFi platforms. The total value locked in DeFi networks rose 2.6% in the past 24 hours to $ 253 billion, according to DeFi Llama, a site that tracks the industry. The total value of PancakeSwap has grown 12% over the past seven days, to $ 6.2 billion.

U.S. regulators report growing concern about DeFi platforms. A White House report on stablecoins, cryptos designed to maintain a value of $ 1, released on Monday, highlighted DeFi’s risks, indicating that regulators are actively seeking to monitor them.

As for the SQUID token, it is not entirely dead. The token was trading on PancakeSwap on Wednesday, according to CoinMarketCap. Several other tokens related to the Squid game have also appeared, including SquidDao, Squidanomics, and Baby Squid Game.

Netflix has no involvement with the cryptos related to Squid. Buyer beware.

Write to Daren Fonda at [email protected]


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