🦑 The Squid scam plunge

Wednesday, November 3, 2021 by Robinhood Snacks |
The Wild West of “Squid Game” [Matthias Clamer/Stone via Getty Images]

The Wild West of “Squid Game” [Matthias Clamer/Stone via Getty Images]

Yesterday’s Market Moves
Dow Jones
36,053 (+0.39%)
S&P 500
4,631 (+0.37%)
Nasdaq
15,650 (+0.34%)
Bitcoin
$62,994 (+3.35%)

Hey Snackers,

The journey to financial freedom is apparently a roller coaster: A California man said he paid off his student loans by eating lunch and dinner at Six Flags for seven years. A $150 annual pass goes a long, long way.

Stocks closed higher after the Fed announced that it’ll begin scaling back its economy-boosting bond buying program this month.

Squid

“Squid Game” over... Halloween is past us, but trends based on Netflix's "biggest-ever" new series aren't. A crypto coin called Squid launched last week at $0.01. The “play to earn” currency professed to let buyers play online games based on the South Korean thriller. Three days later, Squid was up 44,100%, to $4.42. As it gained media coverage, Squid soared 23 million percent between October 26 and November 1, hitting nearly $2.9K. Yesterday it crashed to nearly $0.

  • “Rug pull” strategy: It's assumed that Squid's creators sold all the coins for real money, causing the coin to plummet, from $2.8K to nearly $0.
  • Scam vibes: Creators cashed out, stealing $3.3M from investors who never had a chance to sell Squid coins because of a buy-only restriction imposed by the developers.

Cracks in the honeycomb... There were red flags: a typo-ridden Squid website (“frist game,” “need pay the ticket”) and a leadership team that didn't exist on Google or LinkedIn — like: CEO Kevin Sam, "Founder of Squid Game." (BTW: Netflix reportedly said it was not affiliated with the coin). But Squid isn’t the only parody coin that’s surged recently:

  • Coin explosion: Creating alt-coins is relatively simple, and about 100 new cryptos are created daily, adding to the 13.5K already in existence.
  • Coins can be listed on decentralized exchanges as soon as they’re created, with virtually no due diligence.
  • Coin crowding: In January, Bitcoin made up 70% of total crypto value. Now it makes up less than half as trend-driven altcoins have gained traction. Two meme-inspired coins, Dogecoin and Shiba Inu, are among the top 10 cryptocurrencies.
THE TAKEAWAY

It's a cautionary coin tale… Crypto markets and exchanges lack the controls and fraud protections that the stock market has. But SEC Chairman Gary Gensler wants the “Wild West” of crypto to be regulated in the same way the SEC oversees securities like stocks and bonds. While regulation could take years, the Squid debacle highlights the unique risk of investing in crypto without conducting due diligence.

Bookend

Hardcover kind of day… The Justice Department is eyeing yet another antitrust crackdown. Yesterday the DOJ filed to block publisher Penguin Random House from buying rival Simon & Schuster from ViacomCBS, a $2.2B deal announced last year.

  • Regulators argued the combined company’s 27% market share would give it too much influence over which books are published and how much authors are paid. Penguin is the world’s largest publisher.
  • Both publishers insisted the industry is competitive, thanks to publishers of all sizes and “newer entrants like Amazon (yes, the world’s biggest bookseller is also expanding its publishing biz). They plan to appeal the decision.

Trust-bustin’s back… In July, Biden warned businesses across healthcare, tech, agriculture, and banking of plans to put an end to anticompetitive practices. But since then enforcement has been uneven. The DOJ blocked American Airlines and JetBlue from merging to form an airline with a 24% market share, but other mergers have sailed through:

  • Eat up: The DOJ allowed UberEats to gobble up rival Postmates in a $2.6B deal that gave the company a 37% food-delivery market share.
  • Sweet talk: The DOJ also signed off on a $26B merger between T-Mobile and Sprint that gave the biz an estimated 29% market share.
  • Plug in: The DOJ has allowed lots of Big Tech mergers and acquisitions. Most notably: Facebook and Instagram.
THE TAKEAWAY

Not all antitrusts are created equal… Regulators can crack down on airlines and publishers with the same anti-monopoly rules they’ve used to prevent mega-mergers for decades, while more omniscient businesses like Big Tech have been harder to tackle. But Big Tech is poised to face increasing antitrust pressure. Numerous bills have been proposed to curb Big Tech’s dominance, including a bipartisan one in October aiming to prevent mega-platforms like Amazon, Apple, and Google from favoring their own products over those from third parties.

What else we’re Snackin’

  • Flip: Zillow is ditching its home-flipping "iBuying" business after labor shortages and unpredictable home prices led it to lose $381M last quarter.
  • Out: Yahoo became the latest US company after LinkedIn to pull out of China, as the country’s pressure to censor intensifies.
  • Huh: Elon Musk said Tesla’s $4B deal with Hertz hasn’t closed yet, while Hertz says Tesla has already started delivering cars.
  • Defaced: Facebook is removing its popular but controversial facial-recognition feature as privacy concerns against the social giant escalate.
  • Cruising: Lyft shares jumped more than 12% after it reported that third-quarter sales soared 73% year over year as ride hailing rebounded and the driver shortage eased.
  • Galactic: Amazon’s Project Kuiper is preparing to launch its first two internet satellites into space next year.

Wednesday

  • Earnings expected from Qualcomm, CVS, Marriott, Match Group, Roku, Allstate, Etsy, Fox, MGM Resorts, Discovery, and GoDaddy

Authors of this Snacks own: Dogecoin and Bitcoin, and shares of Apple, Netflix, Google, Uber, Tesla, Amazon, CVS, Roku, and Match

ID: 1904853