Was NYC Token a rug puller? Nansen analysts identify 4 red flags.
Former New York City Mayor Eric Adams has been heavily criticized by the crypto community for the fall of NYC meme coin by more than 80%, bringing its market capitalization below $100 million.
While both Adams and the project team have denied any wrongdoing, the unusual liquidity moves have raised red flags, prompting some analysts to describe the signal as carpet pulling. In an exclusive interview with BeInCrypto, the Nansen analyst outlined 4 reasons why NYC Token seems to be in line with the broader “carpet pulling” trend.
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After the meltdown of NYC Token, 60% of traders will suffer losses
Earlier this week, BeenCrypto reported that Adams unveiled the sign in Times Square. Soon after it started, the rally intensified, but the rally did not last.
“Former NYC Mayor Just Rugpuld. The coin immediately reached $500 million in the market before Eric cashed out. This caused a massive 80% crash, and the token dropped below $100 million,” Ash Crypto posted.
Blockchain analysts have identified unusual liquidity behavior. Rune Crypto Adams withdrew $3.4 million from the token's liquidity pool. Bubble maps identified suspicious fluid movement.
In a separate post, Bubblemaps highlighted the failure of the NYC token. About 4,300 traders interacted with the NYC token, recording an estimated 60% loss.
2,300 traders lost less than $1,000. 200 traders reported losses ranging from $1,000 to $10,000. 40 traders lost between $10,000 and $100,000. 15 traders lost more than $100,000. Sponsored
Has the NYC Token rug been pulled?
Nicolai Søndergaard, a research analyst at Nansen, told BEncrypto that the reason the NYC token was able to group with other carpetbaggers was how liquidity was removed. The analyst listed 4 main reasons:
The group did not provide advance notice of the proposed liquidation “balance”. A large amount of fluid was removed in a short period of time rather than gradually. The amount of fluid removed is not fully restored. Liquid is removed only after the token has already reached its maximum level.
“If it was a legal action, I would have expected to see small changes and if you had mentioned in advance that things would change in another direction. This would probably not have had a negative impact on the image,” said Søndergaard.
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He explained that removing even part of the liquidity can greatly increase the impact of a single sell order. A sell order that would not significantly affect the price under normal liquidity conditions can suddenly move the market even further, often triggering panic, sell-offs and even forcing traders to exit their positions with limit orders.
“What they've done is effectively trap traders, forcing many to sell at a loss in a low liquidity environment, and adding liquidity to the account will not reverse the damage. Setting DCA orders will not fix the damage, rather it's a Band-Aid solution,” the analyst said.
Sondergaard emphasized the importance of clear and transparent communication around liquidity in terms of market integrity. why? Because traders cannot accurately assess risk if they can disappear without warning.
He noted that such incidents undermine trust in the wider ecosystem. The analyst added that better levels of transparency combined with analytics-based monitoring would help distinguish legitimate projects from bad actors. Sondergaard suggested that.
It is prudent for investors to exercise caution when trading memecoins in any case. It is always important to look at the spread of investors, the volume of buying seems to be much higher than the volume of selling, is one-sided liquidity provided (for example, only on tock or is usdc also added?)
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Adams denied the accusations of rug pool
Amid this backlash, former mayor's spokesman Todd Shapiro shared a statement refuting the claims. Adams has denied reports that he moved investor funds or profited from the NYC token launch, saying the allegations are false and unsubstantiated.
NYC Token has experienced the price volatility of newly launched digital assets, according to a spokesperson. He reiterated Adams' commitment to transparency, accountability and responsible innovation.
Previously, the NYC Token team attributed liquidity activities to a rebalancing process following high demand during the launch.
