Eric Adams' NYC Token Faces Rug Pull Allegations After $2.5 Million Liquidity Withdrawal

The NYC Token, a cryptocurrency launched by former New York City Mayor Eric Adams, has become the center of controversy after a $2.5 million liquidity withdrawal sparked rug pull allegations. The token briefly reached a market capitalization of $600 million but collapsed within hours as on-chain activity raised red flags among investors and analysts. The withdrawal occurred at the token's peak, raising concerns about its structure and transparency.

On-chain data showed that a wallet associated with the token's deployer removed $2.5 million in USDC liquidity shortly after the price surged. The funds were partially reinjected into the pool after the token's value dropped by 60 percent, but $900,000 remained unaccounted for. This activity triggered widespread speculation about the token's legitimacy.

Blockchain analyst Nicolas Vaiman from Bubblemaps noted that the liquidity withdrawal mirrored tactics seen in the failed LIBRA token, which was endorsed by Argentine President Javier Milei earlier in 2025.

Why Did This Happen?

The NYC Token was presented as a civic and social initiative, with proceeds intended to fund efforts against antisemitism and anti-American sentiment. Adams also claimed the token would promote blockchain education among youth. However, the project lacked a technical whitepaper or detailed governance structure, raising concerns about its long-term viability.

The liquidity pool created for the token was one-sided, composed solely of USDC, which allowed the deployer to manipulate the price without balancing counterparty assets. According to on-chain investigator Rune Crypto, $3.4 million was withdrawn from the pool, further fueling accusations of a potential scam.

How Did Markets React?

The token's price dropped by more than 80 percent within hours of the liquidity withdrawal, erasing over 90 percent of its market capitalization. The token briefly traded at $0.58 before falling to $0.11. Solscan data confirmed the drastic price drop, with the market capitalization plummeting from $600 million to $110 million.

Investors reacted quickly, with many calling the move a textbook case of a rug pull. The term refers to a common scam in the crypto space where developers market a token to the public, then siphon liquidity from the pool, leaving retail investors with worthless assets.

What Are Analysts Watching Next?

The NYC Token's launch has drawn comparisons to other politically backed crypto projects, such as the failed MELANIA token and the controversial LIBRA token. Analysts are closely monitoring whether the project will face further scrutiny from regulatory bodies like the SEC. The lack of a transparent governance model and the absence of a publicly available whitepaper have raised concerns about the token's legitimacy.

Blockchain researcher Star Platinum highlighted the centralization risks associated with the project. He noted that top wallets controlled over 92 percent of the token supply, leaving the market highly vulnerable to manipulation.

The project team has attempted to downplay the liquidity concerns, stating that the withdrawals were part of a rebalancing process. However, analysts argue that such adjustments should be announced in advance, not executed in secrecy.

The controversy surrounding the NYC Token underscores the growing risks associated with celebrity-backed crypto projects. While these initiatives often generate short-term hype, they frequently lack the fundamentals required for long-term success. As regulatory scrutiny intensifies, investors are being advised to conduct thorough due diligence before participating in such ventures.

The token's future remains uncertain, with its market value and credibility still in question. Continued on-chain monitoring and transparent communication from the project team may be necessary to restore investor confidence. For now, the incident serves as a cautionary tale for both investors and regulators navigating the rapidly evolving crypto landscape.