Why are SHIB, DOGE different from alleged scams like SQUID
Even with increased security measures, developers of dubious cryptocurrency protocols manage to escape with investors' funds. Such incidents, known as "rug pulls" often leave crypto investors questioning even legitimate exchanges for listing such tokens.
Far from being isolated incidents, token rug pulls have become more and more common. Earlier this month, creators of the Squid Games token (the one inspired by Netflix's popular show by the same name) deceived investors. Many thought this was a heist as the Squid Games token developers allegedly ran off with $3.38 million, leaving the crypto industry stunned.
In a similar move, Tsuzuki Inu token developers also left their investors in the dark as they allegedly rug pulled all liquidity worth over $1.1 million from token holders. Most Tsuzuki Inu token holders only found out after they made their own investigations on Twitter.
It's interesting to note that both Squid Game and Tsuzuki Inu tokens that once looked like innocent contenders to other meme tokens attracted a large community and at one point in time were touted as the next Shiba Inu or Dogecoin.
Shiba Inu and Dogecoin are meme tokens that were originally designed to poke fun at cryptocurrencies. Both these projects developed well, on the backs of a large community that has grown ever since the token's genesis. Even major cryptocurrency exchanges and businesses couldn't hold back from offering support for these meme coins, further increasing trust in the coin.
Scam coins, on the other hand, often carry red flags that ironically go unnoticed. For instance, these projects are young and have poor brand recall. Some of these projects don't have proper websites or even whitepapers and those that do offer little or no proof of returns. Even lack of communication over the token's social media channels could mean that the developers don’t want to engage with the community as they could be planning to exit the project.
Taking a closer look at the market cap of a coin is another way of checking the project's reputation. Some project warrants caution when developers artificially inflate the token’s market cap. A crypto asset that has a few thousand followers, but its market cap is worth hundreds of millions of dollars could mean that a handful of the token’s whales are manipulating the price.
Even with much awareness in place, many criminals get away with crypto scams as there are no clear regulations in place. But it’s usually worth checking whether these coins are listed on reputable exchanges that are regulatory-friendly, to say the least.
This happens to be a major reason why BitOasis, the region's largest crypto exchange aims to work closely with regulators. Towards this mission, BitOasis believes that regulating the crypto space could not only help protect investors and crypto traders but also support innovations in this new industry.