Squid Game Token Scam: How the Rug Pull Worked and Its Lessons

The Squid Game token, ticker SQUID, was a cryptocurrency launched in late October 2021 that borrowed its name and imagery from the Netflix series Squid Game, which was then one of the most watched shows in the world. It lived on BNB Smart Chain, which was then still called Binance Smart Chain, and traded mainly through the decentralized exchange PancakeSwap.

The pitch was a play-to-earn online game. Players would supposedly need SQUID tokens to enter competitions inspired by the show and could win more tokens. The project presented itself as a gaming ecosystem, with a website, a whitepaper and social media channels, and it advertised the idea of a real game still to come.

Two facts matter for everything that follows:

• No link to Netflix. The project was not affiliated with the show's producers or distributor. It used the brand's popularity to attract attention.
• The game was not a working product. What existed at the time was a token and a promise, not a playable game that justified the token's price.

The token is now one of the best-known case studies in crypto fraud. It shows how a trending cultural moment, a simple story and an anonymous team can pull in large amounts of money quickly. The same pattern appears with every new TV show, celebrity, meme or news event. The details of the code and the timeline are worth understanding because the same techniques keep being reused under different names.

The sequence below follows what was widely reported at the time. Exact figures varied between data sources, so treat them as approximate.

1. Launch and early hype (late October 2021). The token launched at a tiny price. Attention from the show's popularity, social media posts and exchange-tracker listings spread the word quickly.
2. Parabolic rise. Over a matter of days the price reportedly rose by several thousand percent, to a peak widely quoted at more than 2,000 dollars per token, and its market capitalization climbed into the millions.
3. Selling problems. While the price climbed, many buyers noticed they could not sell. The contract reportedly allowed purchases but blocked ordinary holders from selling. The team's explanation was an anti-dump or anti-whale measure.
4. The collapse (around 1 November 2021). The price fell to nearly zero within minutes. The developers removed liquidity from the trading pool, and the website and social media accounts disappeared. The team was reported to have taken in roughly two million dollars or more.
5. Aftermath. Holders were left with tokens that had no market. Communities and security researchers dissected the contract and the team's behavior, and the incident was widely covered in the general press.

The key lesson is that the price chart alone looked like success right up to the moment of collapse. A rising price is not evidence of a legitimate project, particularly when buyers cannot confirm they can exit.

A honeypot is a contract designed so that ordinary users can buy but cannot sell. In the Squid Game case, the contract reportedly contained logic that prevented regular wallets from selling, while wallets controlled by the team could sell freely.

This matters because it breaks the usual relationship between price and reality. On a normal market, a rising price reflects people buying and selling. On a honeypot, the chart rises because sells are blocked or fail, so the displayed price is not something anyone can actually realize. Everyone who bought saw paper gains that could not be turned into money.

A few mechanics are common across honeypot contracts:

• Blocked sells. Transactions that sell the token back to the pool fail or revert for non-privileged addresses.
• Whitelists or blacklists. Certain addresses, usually the deployer's, can sell while others cannot.
• Extreme sell taxes. A fee on selling that can be raised so high that a sale returns almost nothing.
• Hidden owner controls. Functions that let the owner change rules after launch, sometimes written to look harmless.

The team's stated reason, an anti-dump feature to protect holders, is a typical cover story. Genuine anti-bot or anti-whale limits exist, but they restrict size or timing. They do not leave regular holders unable to sell at all. A contract that makes selling impossible, or dependent on the owner's permission, should be treated as hostile.

People often use scam terms interchangeably. They describe different mechanics, and knowing the difference helps you spot each one.

Term	What happens	Key warning sign
Rug pull	Developers drain the liquidity pool or abandon the project after raising funds	Unlocked liquidity, anonymous team, sudden silence
Honeypot	Contract lets buyers in but blocks them from selling	Sells fail, only a few wallets ever sell
Pump and dump	Promoters inflate a price with hype, then sell to latecomers	Coordinated shilling, urgency, influencer pushes
Soft rug	Team slowly sells its allocation and stops working on the project	Large team wallets, fading updates
Hard rug	Malicious code is used to steal or lock funds directly	Owner functions, minting rights, proxy contracts

The Squid Game token reportedly combined several of these. It had a honeypot restriction on sales, a hype-driven pump fueled by the show's popularity, and a final liquidity removal that is the classic rug pull.

The label matters less than the pattern: the people who control the contract can do something that ordinary holders cannot. Your risk assessment should ask what the owner can do. Can they mint new tokens, change fees, block addresses, pause trading or remove liquidity? If the answer to any of these is yes and the owner is anonymous, you are trusting a stranger with your funds.

Many of the warning signs were visible well before the collapse. Looking at them is useful because they recur in nearly every token scam.

• Borrowed brand without permission. The token traded on a hit show's name with no official partnership. Real brand deals are announced by the brand.
• Anonymous team. No identifiable developers with verifiable histories, so no one to hold accountable.
• Promise of a game, no game. The token price assumed a future product. There was no working product to justify it.
• Impossible sells. Buyers reported they could not sell. This is the single clearest signal, and it appeared while the price was still rising.
• Unnatural chart. A near-vertical rise over days, driven by a flood of new buyers and no genuine sell pressure.
• Weak documentation. A thin whitepaper with awkward writing, vague tokenomics and no technical detail.
• Excuses for restrictions. The anti-dump explanation turned a contract flaw into an apparent feature.
• Social pressure. Community channels that celebrated gains, discouraged questions and treated doubters as people who did not understand.

No single item proves fraud on its own, but the combination should stop you. A useful habit is to ask what the project would look like if it were a scam, and then compare. Where a legitimate project can answer with evidence, a scam answers with enthusiasm and urgency. Fear of missing out is a deliberate part of the design, because it stops people from running checks.

No check removes all risk, but a short routine would have exposed the Squid Game token as dangerous. Run these steps before buying any token that is new, trending or tied to a hot topic.

1. Find the official contract address from several independent sources, not just one social post. Fake tokens often copy a real name.
2. Open it on a block explorer for the right chain. Check whether the source code is verified and published, how many holders there are, and how the supply is distributed.
3. Look at the sells. Scroll through recent transactions. If there are many buys and almost no sells from different wallets, treat that as a red flag.
4. Run a honeypot checker that simulates a sale. It will catch many, though not all, contracts that block selling.
5. Check owner permissions. Look for functions that let the owner mint, pause trading, change taxes or blacklist addresses. Renounced ownership helps but does not guarantee safety if other control routes exist.
6. Check liquidity. See how much is in the pool and whether it is locked, and for how long, with whom.
7. Verify the team through real, long-standing identities rather than new accounts.
8. Test with a tiny amount only if you are willing to lose it, and try selling a small part before committing more.

If you cannot complete these steps, do not buy. Skipping the process because the price is moving is exactly what these schemes rely on. Keep any speculative purchase small enough that losing all of it does not matter.

After incidents like this, two safeguards are often named: liquidity locks and audits. Both help, and both have limits.

Liquidity locks. When a team locks the liquidity-pool tokens in a time-locked contract, it cannot remove the pool for the lock period. This directly blocks the final step of a classic rug pull. Token locker services such as Team Finance exist for this purpose, and they also support vesting for team tokens so allocations are released gradually instead of all at once. Look for a lock that is long, covers most of the liquidity and can be verified on-chain. Short locks, partial locks and locks that expire soon after launch give little protection.

Audits. A security audit reviews contract code for vulnerabilities and malicious functions. A reputable audit from a known firm, with a published report, adds information. But an audit is not a guarantee. It reflects a snapshot of specific code, may not cover owner privileges the way you assume, and fake audits with copied logos are common.

What neither covers. A lock does nothing about a honeypot that blocks sales. An audit does not tell you whether a product will ever exist or whether the price is sensible. Neither can stop you from buying into hype.

Use locks and audits as evidence to check, not as a stamp of approval. Verify the lock address yourself, read the audit scope and confirm that the audited contract is the one actually deployed.

Funds taken in a rug pull are usually moved quickly through new wallets and swapped into other assets, which makes recovery very unlikely. The team behind SQUID was anonymous, and holders had no counterparty to pursue.

If you hold a token you cannot sell, or you were caught in a similar collapse, the practical steps are defensive:

• Do not send more money to unlock your tokens. Messages that say you must pay a fee, tax or deposit to withdraw are a second scam.
• Ignore unsolicited recovery offers. Anyone who contacts you claiming they can retrieve lost crypto for an upfront payment is almost certainly targeting victims.
• Do not connect your wallet to unfamiliar sites or sign approvals you do not understand. Review and revoke old token approvals using a reputable approval-management tool.
• Keep records. Save transaction hashes, wallet addresses and screenshots. These help with reporting and with any tax treatment of losses where your local rules allow it.
• Report it. File a report with your national consumer protection or financial authority and with the relevant platform or tracker that listed the token.

Rules on whether and how losses can be claimed differ by country, so check your local tax guidance or ask a qualified adviser. Treat the loss as final and focus on protecting the rest of your assets.

Event-driven tokens appear whenever a show, sport, meme or news story captures attention. Many are harmless jokes and some are outright traps. The Squid Game token showed that the risk is highest when three things coincide: a famous name, a fast-rising price and a team nobody can identify.

Some habits reduce exposure:

• Ask what the token does today. A product that works now is different from a roadmap.
• Use established venues and assets for the bulk of your portfolio. Regulated or long-running centralized exchanges such as OKX, Bitvavo, Bitget or Gate list assets after some form of review, although a listing is not an endorsement, and you should check each platform's availability and rules where you live.
• Use a DEX aggregator carefully. Tools like Matcha route swaps for you but cannot judge whether a token is legitimate. Verify the token address before swapping.
• Look at established DeFi for yield instead of chasing new tokens. Lending protocols such as Aave V3 and staking protocols such as Lido and Rocket Pool have long track records, although they carry smart-contract, market and depeg risks of their own.
• Size positions for total loss. Never use money you need.

The token's current status, any relaunch attempts and its price history change over time and are best checked on a block explorer and a major price tracker. Treat any project using the Squid Game name as unrelated to the original show and as high risk until proven otherwise. Nothing here is financial advice.