Is the saga of the Squid Game crypto a warning of what is to come?
If there are more sudden downward lurches in other cyber assets, then those lurches will increasingly be driven by tightening liquidity. As money tightens there will be distressed sellers who will dump whatever they can, writes Hamish McRae
The collapse of the Squid Game cryptocurrency is either the canary in the mine warning of an impending catastrophe, or a classic example of the way fraud can sprout up anywhere and everywhere. Or maybe it is both.
The story is simple enough. Some people create a cryptocurrency, in this instance one inspired by the Netflix series from South Korea. Money floods in, pushing the price of one coin to $2,856 (£2,097). Then there seem to be a bar on withdrawals, whereupon the price plunges to near zero, and the developers are estimated to have made off with nearly $3.4m. The website and the social media accounts that had been promoting it have shut. Game over.
The fraud aspects first. Over the next few days we will learn much more about the details of this apparent scam. But I suspect that when we do, we will discover that this is quite a small one compared with the others that have been going on over the past months. The group SlowMist keeps a running tally of losses, and puts the investor losses from “Squid” at $12m. Compare that with losses a few days earlier from a private key leak at BXH of $139m, or $130m at Cream Finance from a flash loan attack.
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