A cryptocurrency launched with the backing of former New York City mayor Eric Adams has been embroiled in controversy just days after its debut, facing serious allegations of a 'rug pull' scam.
Dramatic Launch and Sudden Collapse
The digital asset, named NYC Token, entered the market on Monday with significant fanfare, promoted personally by Adams at an event in Times Square. The token's value experienced a meteoric and volatile rise, surging to a market capitalisation of approximately $580 million shortly after launch. However, this peak was fleeting. Within hours, its value underwent a catastrophic collapse, tumbling to below $100 million according to data from the analytics platform Bubblemaps.
This pattern of extreme volatility immediately raised red flags within the cryptocurrency community. Observers and investors began speculating that the project's creators may have executed a 'rug pull'—a deceptive manoeuvre where developers abruptly sell their holdings, drain the project's liquidity, and abandon it, leaving investors with worthless assets.
Firm Denies Wrongdoing as Analysis Points to Suspicious Activity
The company behind NYC Token has vigorously denied any fraudulent activity. In a statement posted on the social media platform X, the firm acknowledged the allegations but rejected claims of a rug pull. It attributed the dramatic liquidity shifts to necessary rebalancing, stating, "Given the overwhelming support and demand for the token at launch, our partners had to rebalance the liquidity." The company further told Bloomberg that the team had not sold any tokens and was subject to lock-up agreements.
However, analysis from Bubblemaps painted a concerning picture. The platform reported that NYC Token's liquidity was "seeded and withdrawn" in unusual patterns immediately after the launch. "Several wallets purchased large amounts of $NYC early, then moved funds into and out of pools rapidly," their analysis noted, adding that the "timing and size of these movements suggest some level of pre-planned activity."
Adams' Role and Token's Stated Purpose Remain Unclear
Eric Adams, a known cryptocurrency enthusiast, introduced the token as a tool "built to fight the rapid spread of antisemitism and anti-Americanism" and urged the public to buy it. Despite his prominent promotion, his exact role within the company is unclear, and he has not publicly commented on the recent accusations. Attempts to reach him for comment were unsuccessful.
The NYC Token website describes it as a "community" currency and the "digital heartbeat" of New York City, with a total supply of 1 billion tokens. Notably, it fails to list the individuals behind the project or provide a clear explanation of how a cryptocurrency would combat antisemitism. The site does include a standard, stark disclaimer warning investors that the token's value may fluctuate significantly and could result in a total loss.
This incident underscores the highly speculative and volatile nature of the cryptocurrency market. The launch of NYC Token, marked by celebrity endorsement, massive price swings, and immediate fraud allegations, serves as a potent reminder of the risks inherent in digital asset investments.
