Nervous from the ruckus above, he snatched The Gooey Galleon (and with that Mavis) from the surface and dragged her down, along with the crew and you. Assuming you were to come to steal the treasure -which you were- Squid Vicious holds Mavis captive, unknowing of Diver Glumps who are leaving off with it. On Captain Codswallop's order to free Mavis, you hurt or tickle his grasping tentacles and he eventually lets go.
He comes up after a while, retrieving the treasure, and tells you to not come back for it. Uncle Scallops, his neighbour who struck their trident into the final grasping Tentacle, left him as a neighbour because he was too cranky for their liking.
His name is derived from Sid Vicious, a member of the real-life rock band known as the Sex Pistols.
Although his name being "Squid", his design with his bulbous head and thicker tentacles makes him seem more like an Octopus. He strangely seems to be chained up around his neck but he has no problem swimming towards the surface.