In brief
- Binance has said it is trying to hunt down the scammers behind the Squid Game cryptocurrency.
- The news follows a year of regulatory controversy for the exchange.
Crypto exchange Binance has said it is trying to track down those behind the Squid Game cryptocurrency scam who made out with $2 million, per Business Insider.
Binance has said the team is “deploying blockchain analytics to identify the bad actors,” according to a spokesperson.
“Our security team has launched an investigation—as a gesture of goodwill,” the spokesperson added in an email to Business Insider.
Changpeng Zhao, Binance CEO who more often goes by the moniker CZ, weighed in on a blog post published earlier today.
“Because these scams are becoming more commonplace as the DeFi space grows, I’d like to take this opportunity to remind users that DeFi is not without its risks, and we hate to see anyone lose their funds due to scams and other cybercrimes,” CZ said.
The Squid Game scam
The scam debuted on decentralized exchanges (DEX) PancakeSwap and DODO as a Binance Smart Chain token, and reached an all-time high of $2,856 before the token’s affiliated websites and platforms vanished.
SQUID launched using a play-to-earn model, which means that users could conceivably earn more of the token by participating in a variety of games. To participate, users needed to buy SQUID tokens.
The token was riddled with major red flags from the start, not least the plethora of spelling mistakes found on the website, and fake endorsements from big names like Elon Musk. Most alarmingly though, users could buy SQUID, but not sell them.
On November 1, the project’s official Telegram channel wrote, “Squid Game Dev does not want to continue running the project as we are depressed from the scammers and is overwhelmed with stress. We have to remove all the restrictions and the transaction rules of Squid Game."
And with that, the rug pull was complete. Now it appears that Binance will unmask the anonymous founders.
This isn’t the first time Binance has made a lot of self-generated noise about its role in bringing down criminal enterprises.
Working with international law enforcement agencies, Binance helped expose a cybercrime gang last month that was worth approximately $500 million.
“Our ongoing partnerships with law enforcement, as well as security and blockchain analytics firms, will be a driving force in improving cybersecurity measures across the wider crypto industry,” Binance said in a statement at the time.
Yet, Binance has also spent most of this year raising the ire of financial services regulators around the world.
Binance’s regulatory controversies
For most of 2021, Binance has suffered a plethora of public spats with regulators around the world.
The Dutch Central Bank and Japan’s Financial Services Agency issued consumer warnings about the exchange. The Cayman Islands Monetary Authority and Italy’s Consob said Binance was unlicensed in their jurisdictions.
The Malaysia Securities Commission took enforcement action against Binance for operating illegally in the country.
In the UK, the Financial Conduct Authority issued a consumer warning about Binance Markets Limited (BML) in June and then doubled down saying the firm was incapable of being regulated after it allegedly failed to provide basic information about how the business and wider Binance Group is organized.
Decrypt has also repeatedly asked for information about how the Binance Group is organized—as far back as August. We are yet to receive a response.