Curriculum·J306 Smart Contract Risk for Non-Developers·about 31 min
Reading a contract without reading code
By the end of this lesson you can
- →Enumerate the eight contract powers that determine your outcome, without reading Solidity
- →Locate each one using a block explorer and published documentation
- →Explain why a price you cannot sell into is not a price
- →Distinguish a question about code from a question about authority
Junior · enrolled learners
This lesson opens with The SQUID token, November 2021.
- What happened
- A token trading on the reputation of a television series, with no connection to it, was deployed on BNB Smart Chain (then called Binance Smart Chain) and traded on decentralized exchanges including PancakeSwap. Its white paper laid out what it called an anti-dumping mechanism that prevented selling unless certain conditions were met, and in practice buyers could not sell. Buying worked normally. Selling did not. The quoted price rose from about 1 cent to a peak of $2,861 in about a week, with sells blocked, so the trades that set it were purchases. On 1 November 2021 the developers made off with an estimated $3.38M and abandoned the project, and the quoted price fell to approximately zero within minutes.
- The decision point
- The refusal happened on a public chain, where anyone could observe it. Nobody needed to read Solidity to find it, because the observable fact was available for the price of one transaction: attempt a small sell and see whether it succeeds. What the price chart showed was not a market. It was a record of the only side of the trade buyers were able to make, and per S211-01 a quoted number you cannot transact against is not a price at all.
- Recorded loss
- $3,380,000
What you will be able to answer
- →What are the eight powers to check?
- →What is the cheapest test of a token's sell path?
- →Why is an unsellable price not a price?
- →What separates a code question from an authority question?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://gizmodo.com/squid-game-cryptocurrency-scammers-make-off-with-2-1-m-1847972824
- https://www.bbc.com/news/business-59129466
- https://www.cnbc.com/2021/10/28/squid-game-cryptocurrency-up-nearly-2400percent-in-the-last-24-hours.html
- https://coinmarketcap.com/currencies/squid-game/
- https://www.thecoinrepublic.com/2025/01/01/how-squid-games-success-led-to-one-of-biggest-rug-pulls-in-2021/
- https://cryptopotato.com/binance-is-tracking-the-squid-game-scammers-and-will-hand-the-intormation-to-authorities/
- https://www.theblock.co/news/ecosystems/2023-07-14-multichain-ceases-operations-as-ceos-sister-is-detained-in-china-while-holding-220-million-of-funds-239589
- https://www.chainalysis.com/blog/multichain-exploit-july-2023/
- https://www.ankr.com/blog/after-action-report-our-findings-from-abnbc-token-exploit/
Confidence high·Volatility low·Reviewed 2026-10-22·Owner unassigned
Contested
Explorer interfaces, verification status and the availability of read and write tabs vary by chain and change over time. The eight powers are properties of the contract standard and are durable; where to click is not, and the lesson teaches what to look for rather than a fixed sequence of screens.
An unverified contract is not evidence of wrongdoing on its own, since verification is a voluntary step some legitimate deployers skip. It does mean the powers below cannot be established, which per the risk rubric in J306-05 is a finding rather than a neutral absence.
The $3.38M is Gizmodo's estimate (it first reported about $2.1M and corrected it), repeated by the BBC; the $2,861 peak is the CoinMarketCap figure Gizmodo cites. The BBC gives about 1 cent a week earlier and a price of over $2,856, and The Coin Republic gives $3.3M and $2,860. That the white paper laid out an anti-dumping restriction on selling is CNBC's reading of it on 28 October 2021; The Coin Republic, citing the analyst Roger Wang, describes the condition as a requirement to buy further tokens called marbles. The chain is from CoinMarketCap's listing, which links the original SQUID contract on BscScan and notes that the token later migrated to a new contract. Whether SQUID's contract source was verified on the explorer, and exactly how the contract refused sells, are not established by these sources, so the lesson does not claim either.