Concerns are growing in the crypto community about former New York mayor Eric Adams' recently launched NYC token, following on-chain data showing a significant liquidity withdrawal shortly after the launch.
This led some in the community to speculate whether it could be a rug pull. However, the team clarified that the liquidity movements were part of a rebalancing process.
What is former mayor Eric Adams' NYC Token?
According to media reports, Adams launched the "NYC Token" during a press event in Times Square on Monday. The former mayor stated that proceeds from the altcoin would be used for initiatives against antisemitism and anti-American sentiments. Adams also announced the launch on X (formerly Twitter).
The project's official website states that NYC Token is built on the Solana blockchain. It has a total supply of 1 billion. At the token generation event (TGE), the circulating supply was 80 million tokens.
Additionally, 70% of the total supply is allocated to a 'NYC Token Reserve,' which will be excluded from the planned circulating supply.
“NYCTOKEN ($NYC) is intended to serve as an expression of support for and engagement with the ideals and spirit symbolized by '$NYC' and associated artwork, and is not intended to be, or be the subject of, an investment, investment agreement, or any security. NYCTOKEN is not affiliated with, approved by, or linked to the city of New York, any public agency, or any official organization in New York City. This is a community-driven project created by independent developers,” states the website.
Analysts are expressing concern over the NYC Token debut
Data from GeckoTerminal shows the token surged strongly right after launch and reached a market cap of over $700 million. However, this momentum quickly faded as the price plummeted and the market cap dropped below $100 million.
As of now, NYC has seen a modest increase, and the market cap is now around $128.8 million.
It is particularly worth noting that on-chain analysts have warned about suspicious activities. Blockchain investigator Rune Crypto alerted the community that $3.4 million had been withdrawn from the liquidity pool, hinting that this could be a scam.
“Eric Adams has now drained over $3.4 million from the liquidity pool of his memecoin: it's now a rug pull. Ironically, his net worth was only $2 million,” reads the post.
Bubblemaps also highlighted 'suspicious LP activity' around NYC. A wallet 9Ty4M, linked to the NYC token issuer, created a one-sided liquidity pool on Meteora.
At the token's peak, the wallet removed approximately $2.5 million in USDC. Then, around $1.5 million was added back to the pool after the price dropped by about 60%.
The platform suggested that the situation surrounding this Solana-based token resembles the problems seen with the LIBRA token. This raises questions about transparency and investor protection in political crypto projects.
"This unfortunately resembles the $LIBRA launch, where liquidity was also heavily manipulated," wrote Bubblemaps.
In addition to liquidity challenges, analysts also pointed out serious centralization. Crypto analyst Star Platinum warned against the project's centralized structure and the risks it poses to private investors.
"Top 5 wallets alone: over 92% of the supply. If LP is withdrawn → immediate rug pull. Multiple fake NYC tokens launched simultaneously → confusion aided scammers. Even a 10% sale from the 70% wallet would crush the chart. This is not a normal distribution. This is not a safe market structure. Private investors are completely exposed," emphasized the analyst.
The project has nevertheless commented on on-chain activity, attributing the liquidity movements to what they describe as a rebalancing process.
Going forward, the development of NYC Token will likely depend on increased transparency around liquidity management. Furthermore, on-chain monitoring and clear communication from the team could help address community concerns as the token market evolves over the coming weeks.