Scene from "Squid Game" by Netflix
When Bernard heard about a token named after the popular South Korean Netflix series "Squid Game," which chronicles the lives of cash-strapped adults who play in a deadly tournament for a big jackpot, he did a quick scan on Google to see if the coin was legit.
After catching headlines – but before reading the full articles, many of which warned of some red flags around the project – he decided to invest his entire life savings of $28,000 into SQUID, a coin that billed itself as a "play-to-earn" cryptocurrency. On Monday, the token hit a high of just over $2,860, before plummeting to nearly zero, according to CoinMarketCap.
"My rush to buy this token is for a single idea that went into my brain that 'Squid Game' is very, very popular now, and its token must be popular now," said Bernard, who lives in Shanghai, and asked to be identified only by his English first name because trading in cryptocurrency is of questionable legality in China. "It's a tragedy. I don't know how to recover my loss."
Bernard tells CNBC that he supports his family and is now worried about how to pay his bills.
Transaction records from BscScan appear to show the token's anonymous creators collected least $3.4 million in investor funds. The crypto ecosystem is rife with so-called "rug pull" schemes wherein token founders abruptly abandon their project and take investor funds with them by swapping the project coin for cash.
"Squid Game Dev does not want to continue running the project as we are depressed from the scammers and is overwhelmed with stress," Squid developers posted Monday in their Telegram channel, which now has more than 89,000 members.
The token's white paper and website have since disappeared, though archived copies of its official landing page and white paper are still online. Twitter has temporarily restricted its account due to "suspicious activity." The creators did not respond to multiple emails that CNBC sent to the addresses listed on the web site.
Bernard says he has reached out to the FBI and the SEC about his lost investment.
He has also reached out to the team behind the token, as well as Binance-owned CoinMarketCap, which listed the coin on its website, both of whom "did not take responsibility" for his loss.
Bernard, who says he has a lot of experience in crypto and computers, blames media outlets for his investment in SQUID as well.
He isn't alone. Others have taken to Twitter to say that giving any oxygen to meme coins like this one functions as an implicit endorsement.
"In this trading space, everyone will rush," said Bernard, "and sometimes you feel FOMO." That sense of FOMO, or the fear of missing out, is a common sentiment among crypto traders who invest in early-stage altcoins, eager for a chance at big and quick returns on their investment.
Saurabh Dubey has been interested in cryptocurrencies since 2016. He now works for an accounting firm in the U.S., and in his free time, he regularly day trades new altcoins.
Just past midnight each day, Dubey looks at new coins being listed on CoinMarketCap and CoinGecko, trying to identify trends based on the charts. He typically places bets of around $100 on coins that he thinks show promise in their initial price movements.
"Some have a shot at going nuts," he said.
Dubey says that he used the proceeds from a recent successful bet on another meme coin to invest $250 into SQUID.
"I thought I'll play with house money," said Dubey.
This was when SQUID was trading at about 4 cents – well before all the media hype began.
Dubey says he invested in SQUID because it was the second-ranked token on CoinMarketCap's list of the most recently listed coins.
"I picked it up because it already had some amount of volume and already had some amount of gain, and if you look at the chart, you will see that the chart mimics the start of how SafeMoon got started," said Dubey, referring to an altcoin launched in March that appreciated quickly and is still being traded.
He noted that his investment was a gut move more than anything else. "It wasn't scientific."
But then Dubey started to notice all the red flags, many of which he hoped were not that big a deal.
"The biggest flag was that it never had a dip," explained Dubey. "Every coin has to have a dip. There is no way a coin goes up constantly for five days...The only thing that looked like a dip was when it stayed at the same level."
The level of price appreciation was another big concern. "When it hit $1, I was like, 'Okay, 20x is reasonable. That can happen.' When it got to $10, that's when I started thinking there's something off," he said.
"Most coins that actually have a product behind them are barely able to reach that point," continued Dubey.
Another red flag: None of the token's founders could be found on LinkedIn, plus its website and white paper were filled with grammatical and spelling errors.
Ultimately, Dubey's exposure was limited, but investors like Bernard who gambled all their savings on this coin want the creators behind the project to be held accountable.
Bernard, who has been proactive in reaching out to U.S. authorities, says that his hands are tied to take any further action, because he can't file a report with local police.
"In China, it's not so legal to trade cryptocurrencies," Bernard shared with CNBC.