Former New York Mayor Eric Adams' NYC Meme token is facing strong criticism from the cryptocurrency community after dropping more than 80%, causing its market Capital to fall below $100 million.
Although both Adams and the project team deny any wrongdoing, the unusual liquidation fluctuations have raised many questions, with some experts even suggesting the Token shows signs of a "Rug Pull." In an exclusive interview with BeInCrypto, a Nansen analyst outlined four reasons why the NYC Token could be classified as a "Rug Pull."
Approximately 60% of traders suffered losses after the NYC Token crash.
Earlier this week, BeInCrypto reported that Adams unveiled the Token in Times Square. Shortly after, the Token price surged, but this rally was short-lived.
“The former NYC Mayor just executed a Rug Pull. The Token immediately reached a market Capital of $500 million before Eric liquidation the Token, causing the price to plummet 80% and the market Capital to fall below $100 million,” Ash Crypto posted .
Blockchain analysts have detected unusual liquidation behavior . Rune Crypto reports that Adams withdrew $3.4 million from the Token 's liquidation pool. Bubblemaps also points to suspicious liquidation activity.
In another post , Bubblemaps stated that the consequences for the NYC Token were quite severe. Approximately 4,300 traders bought and Token Sale , while an estimated 60% suffered losses.
- 2,300 traders lost less than $1,000.
- 200 traders lost between $1,000 and $10,000.
- 40 traders lost between $10,000 and $100,000.
- Fifteen people lost over $100,000.
Is NYC Token subject to Rug Pull ?
Nicolai Sondergaard, an analyst at Nansen, told BeInCrypto that the reason NYC Token might be grouped with other Rug Pull is because of the way they withdraw liquidation. He pointed out four main reasons:
- The project team did not make any prior announcement about "rebalancing" liquidation.
- A large amount of liquidation was withdrawn in a very short period of time instead of being withdrawn gradually.
- The liquidation that was withdrawn was not fully replenished.
- Liquidation is only withdrawn when the Token price has risen sharply.
“If this is a truly transparent decision, I think there should be small, gradual changes and advance notice so everyone knows about the changes. Doing so would probably not negatively impact the Token,” Sondergaard commented.
He explained that even partial liquidation withdrawals can significantly impact prices, with just a single sell order. A sell order that wouldn't cause major fluctuations under normal liquidation conditions can, under low liquidation , push prices down much more sharply, often leading to panic selling and forcing many limit orders to cut their losses.
"What they're doing is essentially trapping traders, forcing many to sell at a loss in a low liquidation environment, and then adding liquidation doesn't salvage the situation. Even placing DCA orders is only a temporary solution," the analyst said.
Sondergaard emphasized that, in terms of market transparency, openness and clarity regarding liquidation are essential. The reason is that traders find it difficult to assess risk if liquidation can disappear unexpectedly without prior warning.
He stated that incidents like these erode trust in the overall ecosystem. According to him, higher standards of transparency, combined with monitoring from analytical tools, will help investors distinguish reputable projects from scams. Sondergaard Chia that,
“It would be wise for investors to exercise greater caution when trading memecoins. Always XEM the allocation of holdings, whether buying pressure significantly outweighs selling pressure, and whether the liquidation is only being added on one side ( Token only or USDC as well)?”
Adams denies the Rug Pull allegations.
Amidst the controversy, the former mayor's spokesperson , Todd Shapiro, spoke out to deny the allegations. He denied that Adams transferred investor funds or profited from the NYC Token issuance, emphasizing that the allegations were false and unsubstantiated.
A spokesperson said that the NYC Token volatile price is common with newly launched digital assets . He also reiterated Adams' commitment to transparency, accountability, and controlled innovation.
Previously, the NYC Token team stated that the unusual liquidation activity was due to them rebalancing the supply because of a sudden surge in demand right after its launch.
