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The meme coin used by former New York mayor Eric Adams has come under fire from the cryptocurrency community after it fell more than 80%, pushing its market value below $100 million.
While Adams and the project team deny any wrongdoing, the unusual liquidity movements have raised warning signs, leading some analysts to describe the token as a potential scam. In an exclusive interview with BeInCrypto, a Nansen analyst offered four reasons why the New York token appears to fall within the broader definition of “pulling the rug.”
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About 60% of traders experience losses after the collapse of New York symbols
Earlier this week, BeInCrypto said that Adams unveiled the symbol in Times Square. The rally came soon after its launch, but the rally was not sustainable.
“The former mayor of New York was defeated. The coin immediately reached $500 million in market capitalization before Eric withdrew liquidity from the coin. This caused a massive collapse of 80%, and the token fell below $100 million.” published Ash Crypto.
Blockchain analysts have identified a behavior Unusual In cash. Rune Crypto claimed that Adams removed $3.4 million from the token’s liquidity pool. Bubblemaps also identified suspicious activity in Liquidity.
in Manifesto Separately, Bubblemaps highlighted the ramifications of the New York symbol. About 4,300 traders interact with the New York symbol, with about 60% of them recording losses.
- 2,300 traders lost less than $1,000.
- 200 traders suffered losses from $1,000 to $10,000.
- 40 traders lost between $10,000 and $100,000.
- 15 traders suffered losses exceeding $100,000.
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Has the rug been pulled from New York icons?
Nikolai Sondergaard, a research analyst at Nansen, told BeInCrypto that the reason for the New York token could be labeled with withdrawals. Other How do you remove liquidity? The analyst cited four main reasons:
- The team has not previously announced a cash “rebalancing” plan.
- A large amount of liquidity was removed in a very short period rather than gradually.
- The withdrawn cash has not been fully returned.
- The liquidity was removed only after the token had already reached high levels.
“If it had been a legitimate move, I would have expected to see small changes and even mentioned in advance that things would change correctly. This probably would not have negatively impacted the code,” said Sondergaard.
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He explained that eliminating liquidity, even partially, significantly increases the impact of a single sell order. A sell order that would not have significantly affected the price in normal liquidity conditions can suddenly move the market further, often causing panic, sales falls, and even forcing traders with limit orders to exit their positions.
“What they did effectively stop the traders, forcing many to sell at a loss in a lower liquidity environment, and restoring liquidity will not cancel the damage that has been done. The creation of DCA orders will not cancel the damage, it is a temporary solution,” said the analyst.
Sondergaard stressed that, from a market integrity perspective, clear communication Transparency about liquidity is key. For what? Because traders cannot accurately assess the risks if liquidity disappears without warning.
He said such incidents undermine trust in the wider ecosystem. A better standard of transparency, coupled with analytics-based oversight, could help distinguish between legitimate projects and bad targets, the analyst added. Sondergaard suggested that,
“Investors would be wise to exercise caution in any case when trading memes. It is always useful to look at the distributions of holders. It seems that the volume of purchases is significantly greater than the volume of sales, or is the liquidity provided by one part (for example, only in the token or USDC is also added?”
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Adams denies the allegations of carpetbagging
In the middle of this response, a spokesperson shared Former mayors Todd Shapiro released a statement denying these allegations. He denied reports that Adams transferred investors’ funds or profited from the New York token launch, insisting the allegations were false and unsupported.
The spokesperson noted that the New York token experienced price fluctuations typical of digital assets New . He confirmed Adams reaffirms his commitment to transparency Responsibility and responsible innovation.
Previously, the New York Token team attributed the liquidity movements to a rebalancing process following strong demand at launch.
