The launch of the NYC token, associated with former mayor Eric Adams, unfolded into a nightmare as it collapsed within mere hours.

Following the token’s launch, accusations surfaced regarding insider trading and manipulation of liquidity, prompting significant outrage and scrutiny within the crypto community.

Political Token Disaster

Blockchain analysts observed that the token was introduced abruptly, rapidly attracting attention due to Adams’ name and his public support. Many investors believed it had governmental or civic support, causing the NYC token’s market capitalization to soar to almost $600 million swiftly.

However, this success was short-lived. Data from Bubblemaps revealed suspicious activities in liquidity pools linked to the deployer’s wallet. One wallet identified as 9Ty4M created a one-sided liquidity pool on Meteora and later withdrew around $2.5 million in USDC near the peak price. After a drastic token depreciation of about 60%, the same wallet added back only about $1.5 million while extracting close to $1 million from the pool, raising further questions without reasonable explanations.

Consequently, the NYC market cap plummeted below $100 million. Analyst Rune Crypto claimed that the launch complexly resembled a rug pull, stating that the total liquidity drained subsequently exceeded $3.4 million. Lookonchain confirmed that liquidity withdrawal coincided with the peak, igniting panic selling in the market. One investor reportedly lost $473,500—over 63% of their stake—in under 20 minutes.

The ownership distribution of the token raised immediate alarm bells, as one wallet controlled roughly 70% of the total supply, with the top 10 wallets accounting for nearly 99%. This concentration grants insiders overwhelming control over pricing.

Chaos in the Market

Adding to the chaos, various counterfeit NYC tokens emerged concurrently, further fragmenting liquidity and misleading traders. Adams had initially presented the token as a political signal against antisemitism and anti-American sentiments. However, investigations revealed a lack of governmental participation, transparency, or public funds behind the project. As liquidity evaporated and values crumbled, market observers drew parallels to previous market manipulations, deeming this one of the most extreme political-themed crypto scams witnessed to date.

Hoskinson’s Insights on Politicized Tokens

The unrest surrounding the NYC token correlates with broader industry concerns regarding politically affiliated tokens and their risks to investors. Charles Hoskinson, co-founder of Cardano, criticized Donald Trump’s ties to meme coins, labeling them as detrimental and politically divisive. He expressed that such token launches jeopardize bipartisan efforts to regulate crypto, hindering legislation like the Clarity Act and fostering perceptions of corruption in the sector.

While he doesn’t oppose meme coins generally, Hoskinson cautioned that politicized launches could destroy trust, create opportunities for fraud, and reduce the market to a “predatory free-for-all.”