Former NYC Mayor Eric Adams Disputes Memecoin Rug Pull Allegations, Claims No Profit

Former New York City Mayor Eric Adams has denied allegations that he or his team engaged in a rug pull following the launch of the NYC Token. The project's spokesperson, Todd Shapiro, stated that claims of liquidity withdrawal are false and unsupported by evidence.

The NYC Token, launched on Solana, initially surged to a peak market cap of over $580 million before plummeting by more than 80% within 30 minutes of its debut. Analysts and on-chain observers pointed to liquidity movements as a cause for concern. Blockchain investigator Rune Crypto flagged a $3.4 million liquidity drawdown, while Bubblemaps noted a wallet linked to the token deployer removing $2.5 million in USDC at the market's peak.

In response, the NYC Token team attributed the liquidity shifts to a 'rebalancing' process, citing high demand at launch as the reason for the adjustments. According to a statement on the project's X account, additional liquidity was added to the pool after the price decline to stabilize the token.

Why Did This Happen?

The sharp liquidity movements sparked immediate skepticism among crypto observers. StarPlatinum, a crypto analyst, warned of the project's high centralization, emphasizing the risks to retail investors. The token's supply is heavily concentrated, with the top five wallets holding 92% of the supply, raising concerns about price manipulation.

These dynamics made the token highly susceptible to volatility. One investor reportedly lost $473,548 within 20 minutes as the token's value collapsed. The liquidity drawdown occurred at the peak of retail demand, amplifying slippage and investor losses.

How Did Markets React?

The market response was swift and severe. The token's market cap fell from a high of over $580 million to below $130 million within a short period. The drop led to widespread accusations of a rug pull, a common term in the crypto community for projects where developers remove liquidity or abandon the token, causing its value to collapse.

In a statement on Adams' X account, Shapiro emphasized that the former mayor did not profit from the launch and that 'no funds were removed from the NYC Token.' The team also reiterated Adams' commitment to using the token to support causes like combating antisemitism and funding blockchain education.

What Are Analysts Watching Next?

The controversy has reignited broader concerns about transparency and regulation in the crypto market. Analysts are monitoring whether the project will provide further details on the liquidity movements and how the market will respond to similar token launches in the future.

The incident also highlights the growing regulatory scrutiny of crypto projects, especially those backed by public figures. While the U.S. Securities and Exchange Commission (SEC) has taken a more hands-off approach in recent months, the agency has not ruled out enforcement actions in cases of fraud.

Investor losses in the NYC Token raise questions about the need for clearer disclosure requirements and investor protections in the crypto space. The decentralized and pseudonymous nature of many crypto projects complicates enforcement and recovery efforts.

As the crypto market continues to evolve, incidents like the NYC Token collapse underscore the importance of due diligence, transparency, and regulatory clarity for both investors and project creators.