Former New York City Mayor Eric Adams’ NYC Meme Coin has plunged more than 80%, drawing harsh criticism from the crypto community as its market cap drops below $100 million.
Both Adams and the project’s team deny wrongdoing, but unusual liquidity movements have raised red flags and led some analysts to characterize the token as a potential rug. In an exclusive interview with BeInCrypto, Nansen analysts outlined four reasons why the NYC token appears to fit into the broader definition of a “rug pull.”
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Approximately 60% of traders suffer losses due to New York token meltdown
Earlier this week, BeInCrypto reported that Adams unveiled the token in Times Square. It skyrocketed immediately after its release, but the rise was unsustainable.
“Former New York City Mayor went on a rant. Before Eric pulled liquidity from the coin, the coin instantly reached a market cap of $500 million. This caused a massive 80% crash, dropping the token below $100 million,” Ash Crypto posted.
Blockchain analysts have identified anomalous liquidity behavior. Rune Crypto claimed that Adams removed $3.4 million from the token’s liquidity pool. Bubble Map also identified suspicious liquidity activity.
In a separate post, Bubble Map highlighted the impact of the NYC token. Approximately 4,300 traders used the NYC token, and approximately 60% recorded losses.
2,300 traders lost less than $1,000. 200 traders suffered losses ranging from $1,000 to $10,000. 40 traders lost between $10,000 and $100,000. 15 traders suffered losses in excess of $100,000. sponsored
Has the token rug in NYC been removed?
Nicolai Sondergaard, a research analyst at Nansen, told BeInCrypto that the reason the NYC token can be grouped with other rug pulls is because of how liquidity has been removed. Analysts outlined four main reasons.
The team did not make any advance announcements about the planned liquidity “rebalance.” A large amount of liquidity was removed not gradually, but in a very short period of time. The withdrawn liquidity was not fully returned. Liquidity was removed only after the token had already reached a high level.
“If it was a legitimate move, I would have expected to see a small change or some prior mention that things were going to change. This probably wouldn’t have had a negative impact on the token,” Sondergaard said.
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He explained that removing liquidity, even partially, greatly increases the impact of a single sell order. A sell order that would not have a significant impact on price under normal liquidity conditions can suddenly move the market significantly, causing a panic or series of sells and even forcing traders with limit orders out of their positions.
“What they have done is effectively trap traders, forcing many to sell at a loss in an illiquid environment, and replenishing liquidity cannot undo the damage done. Setting DCA orders does not reverse the damage, but is rather a band-aid solution,” the analyst said.
Mr. Sondergaard emphasized that clear and transparent communication about liquidity is essential from a market health perspective. why? This is because traders cannot accurately assess risk when liquidity can disappear without warning.
He said incidents like this undermine trust across the broader ecosystem. The analyst added that better transparency standards, combined with analytics-driven monitoring, could help distinguish legitimate projects from malicious ones. Sondergaard suggested:
“For investors, it is always wise to exercise caution when trading meme coins. It is always worth looking at the distribution of holders. Does the purchase volume appear to significantly exceed the sales volume, or has unilateral liquidity been provided (e.g. just the tokens, or has USDC been added as well?)”
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Adams denies allegations of pulling the rug
Amid the backlash, Todd Shapiro, a spokesperson for the former mayor, released a statement pushing back against the claims. He denied reports that Adams moved investor funds or profited from the launch of the NYC token, calling the allegations false and unsupported by evidence.
The spokesperson noted that the NYC token experienced price fluctuations typical of newly launched digital assets. He reiterated Adams’ commitment to transparency, accountability and responsible innovation.
Previously, the NYC Token team believed that the liquidity movement was due to a rebalancing process due to strong demand at launch.
