On October 20, 2021, a new website popped onto the Internet offering cryptocurrency tokens based on the popular Netflix Series Squid Game. The tokens were to be used in an online game based on the series. They started dirt cheap but rocketed to $2,856 per token just before the November 1st collapse.
What is clear now is that the website was a giant money-sucking hole into which hapless would-be players poured as much as $2.1 million real dollars before the scammers cashed out their tokens and left.1 This is just the newest twist on one of the oldest scams in history.
The Pump and Dump begins with the scammers hyping a thing. It can be almost anything with a low price tag. In 1634-7 Holland, the hyped thing was tulip bulbs. In 1995-99 U.S., it was Beanie Babies. A perennial favorite of scammers are penny stocks.
Honest people who have a little money decide to buy the thing thinking they might make some money if the thing increases in value. But the thing has no intrinsic value. It is not a stock certificate of a going concern, or a valuable commodity used in industrial processes, or even a treasured artwork. It is just hype.
There was a huge clue that the Squid Game cryptocurrency was a scam: players could buy tokens, but they couldn’t sell them on the website. First rule of investing: Never put your money into an investment unless you know how you are going to get it out. And, before you do that, make sure your “investment” is actually an investment.
Even currency issued by a Central Bank is not an investment, but legal tender that governments provide for the settlement of debts and for the general conduct of commerce within their borders. Cryptocurrency is neither backed, nor even recognized as legal tender by any governmental authority on the planet. It does not exist in physical form and is completely unregulated. It is most definitely NOT an investment, so please don’t treat it like one.
1 The Guardian (November 1, 2021) online edition.
