Crypto can be exciting—but it can also be dangerous. Behind the flashy coins and internet hype, some investors fall into traps set by scammers. One of the most common tricks is the “pump and dump.” That’s when people hype up a new coin, watch the price skyrocket, then sell everything and leave others holding the bag.

Let’s take a closer look at four real-life examples of crypto fraud. These stories reveal just how risky it can be when greed, hype, and social media collide.

The Squid Game Token (SQUID) Rug Pull

In late 2021, crypto traders started buzzing about a new coin inspired by the hit Netflix show Squid Game. Called SQUID, this token launched with a clever hook—it claimed you’d need it to play a future online game based on the series. Sounded cool, right?

People rushed to buy in. The price soared from just pennies to over $2,800 in a matter of days. But then… everything crashed.

Investors noticed something strange: they couldn’t sell their tokens. The website vanished. The developers disappeared. In the blink of an eye, over $3 million was gone, and SQUID’s value dropped to zero.

Turns out, the whole thing was a rug pull—a scam where developers hype up a coin, then run off with the money. And Netflix? They had nothing to do with it. This was just one big fraud using a popular name to gain trust.

Lesson learned: Just because something sounds familiar doesn’t mean it’s safe. Always double-check who’s behind a project—especially if it’s linked to pop culture.

(Source: BBC, Wired)

SafeMoon and the Power of Celebrity Hype

In 2021, a token called SafeMoon exploded onto the scene. It promised to reward long-term holders and “burn” coins over time, making them more valuable. But what really drove the hype? Big names.

Celebrities like Jake Paul, Soulja Boy, Lil Yachty, and Nick Carter started tweeting about SafeMoon. Social media influencers followed. Prices shot up—and millions of people bought in.

But by the end of the year, SafeMoon had lost more than 80% of its value, and investors were furious. A class-action lawsuit was filed in early 2022, accusing SafeMoon’s creators and celebrity promoters of being part of a pump and dump scheme.

The lawsuit claimed that the team and promoters didn’t just advertise the coin—they secretly owned big chunks of it. While everyday investors were being told to “HODL,” insiders allegedly sold their tokens during the hype, pocketing profits while prices were still high.

Lesson learned: Just because a celebrity promotes something doesn’t mean it’s legit. They might be getting paid—or worse, benefiting directly from your investment.

(Source: ClassAction.org, InvestorPlace)

Centra Tech and the Fake Visa Card

Centra Tech looked like the real deal. It claimed to offer a crypto debit card backed by Visa and Mastercard. That meant you could supposedly spend your crypto like regular cash. The project caught fire, especially after Floyd Mayweather and DJ Khaled promoted it online.

But there was one huge problem: none of it was true.

The entire thing was a scam. The founders had faked their partnerships, their executive team bios, and their roadmap. There was no working debit card. Investors had poured in over $25 million during the initial coin offering (ICO), based on lies.

In 2018, the SEC charged the founders with fraud, and the celebrity promoters later settled for failing to disclose their paid endorsements.

Lesson learned: If it sounds too good to be true—like a debit card that magically works with any crypto—it probably is. Real partnerships are easy to verify. Don’t just trust what’s on the website.

(Source: SEC, BBC)

Hawk Tuah Coin: Viral Fame Meets Crypto Chaos

In May 2025, Haliey Welch—better known as the “Hawk Tuah” girl from a viral TikTok—launched a meme coin called $HAWK on the Solana blockchain. Backed by her sudden internet fame, the coin quickly went viral.

Within hours, it reached a market cap of nearly $500 million.

But the hype didn’t last.

Blockchain sleuths noticed that 80% to 90% of the total coin supply was controlled by just a few wallets. One of them dumped their tokens within two hours, walking away with $1.3 million. The token’s value crashed more than 90%, leaving many fans and first-time investors with heavy losses.

Welch denied running a scam, saying she didn’t understand how crypto worked and that she didn’t profit. She said any money she received went to legal and PR expenses. While the SEC investigated, no penalties were filed.

Lesson learned: Virality doesn’t equal value. Even if a coin feels fun or harmless, it can still cause real financial damage.

(Source: The Independent, NY Post, People)

Final Thoughts

Crypto is a wild ride. It can create wealth—but it can just as easily wipe out savings. These pump and dump scams show how greed, misinformation, and internet hype can trap even the most careful investors.

So what can you do?

  • Research before investing.
  • Be skeptical of celebrity promotions.
  • Watch for red flags like unrealistic returns or low liquidity.
  • Stick with trusted sources, like your local bank or credit union.

At 1st Source Bank, we’re here to help you make smart money choices. If you’re exploring investing—whether traditional or digital—talk to a trusted advisor first. Your future deserves more than a gamble.