Over 60% of Traders Lost Money on Eric Adams-Backed NYC Token

Over 60% of traders lost money on Eric Adams-backed NYC token within hours of its launch. The token surged to a $600 million market cap before collapsing to around $110 million. Blockchain analytics platforms identified suspicious liquidity movements tied to the project's deployer wallet.

On-chain data showed a wallet linked to the token's creator removed $2.43 million in USDC liquidity at the peak. The same wallet later added back only $1.5 million, leaving approximately $932,000 unaccounted for. This pattern raised concerns about potential rug-pull activity in the cryptocurrency market. The token's price dropped by more than 81% from its peak of $0.58 to $0.11.

One wallet held about 70% of the total NYC token supply. The top 10 wallets controlled nearly 99% of the tokens. This concentration of ownership gives insiders significant control over the token's price and liquidity. Similar patterns were seen in previous rug pulls like the MELANIA and LIBRA tokens according to reports.

Why Did This Happen?

The NYC token's rapid collapse mirrors previous crypto rug pulls in several ways. Like the MELANIA token promoted by Melania Trump, the NYC token saw massive liquidity movements immediately after launch. On-chain analyst Bubblemaps noted the suspicious activity was similar to the $LIBRA token launch in 2025.

The token's market dynamics were further complicated by the appearance of multiple fake NYC tokens. These cloned tokens split liquidity among competing tokens and misled traders. The token's official website emphasized its role in "fighting antisemitism and anti-Americanism" but provided no transparency about project operations or financial backing.

How Did Markets React?

The NYC token's collapse had immediate consequences for traders. One trader reportedly lost $473,500 in less than 20 minutes as panic selling intensified. The token's liquidity extraction triggered widespread selling pressure across multiple exchanges.

The incident has renewed scrutiny of politician-backed cryptocurrencies. Similar issues arose with the LIBRA token promoted by Argentine President Javier Milei, which led to fraud allegations and class-action lawsuits. The NYC token's collapse has prompted comparisons to other politically themed crypto projects, with analysts warning about the risks associated with such tokens.

What Are Analysts Watching Next?

Regulators and market observers are closely monitoring the legal implications of the NYC token's collapse. Previous rug pull cases like the $LIBRA and MELANIA tokens have led to investigations and lawsuits. The SEC and other regulatory bodies are likely to review the project's structure and the actions of its creators.

Blockchain forensics experts are analyzing on-chain data to determine if intentional fraud occurred. Key factors include the timeline of liquidity movements, wallet ownership patterns, and whether project creators had the ability to manipulate token value.

Investor protection advocates are urging more due diligence for new crypto projects. Red flags include anonymous team members, unlocked liquidity, and unrealistic return promises. The NYC token's launch highlights the importance of smart contract audits, liquidity locking mechanisms, and transparent governance structures in new crypto projects.

The incident also raises questions about the role of high-profile figures in promoting cryptocurrencies. Similar concerns were raised about Trump's Official Trump Coin and Milei's LIBRA token. Political endorsements may attract attention but do not guarantee the legitimacy or long-term value of a crypto project.

Investors are advised to carefully evaluate tokenomics, team backgrounds, and project fundamentals before investing in new crypto projects. The NYC token's collapse serves as a cautionary tale about the risks associated with unvetted tokens, particularly those with concentrated ownership and unclear governance structures.

Market analysts suggest that the NYC token's experience may lead to increased regulatory scrutiny of politically themed crypto projects. The SEC and other regulatory bodies may take a closer look at how such projects are structured and marketed to investors. This could lead to more stringent requirements for project transparency and investor disclosures.