New York — For a moment, Eric Adams was riding high.
New flights to Dubai and DRC, now unemployed Former mayor of New York City He returned to Times Square on Monday to announce his first initiative as a private citizen: a new cryptocurrency that would also work to overcome anti-Semitism and “anti-Americanism.”
“We are about to change the game,” he promised, without describing exactly how digital assets would support those lofty ambitions. “This thing is going to go crazy.”
But yet It rose to a valuation of nearly $600 million Within minutes of its launch, the new currency, dubbed NYC Token, went into free fall, losing nearly 75% of its value by that evening. The drop came after an account linked to the token’s creation withdrew $2.5 million worth of coins, according to Cryptographic analytics Bubblemaps company.
About $1.5 million was later returned, although investor confidence had collapsed by then, the company said. For some cryptocurrency experts, the offering had all the hallmarks of a “rug-pulling.” The scheme — prevalent among celebrity-linked cryptocurrencies — involves insiders overstating the value of an asset and then quickly dumping their stakes, saddled amateur investors with huge losses.
Others suggested that Adams and his inexperienced team had been duped by more savvy investors, who took advantage of a sloppy launch.
The debate has found Adams back in the damage control mode that defined much of his tenure as mayor: Denial of misconduct, Attacking the press It faces scrutiny about The efficiency of his inner circle Of the loyalists.
Through a former campaign spokesperson, Adams has issued several statements in recent days clarifying that he did not profit from the token or move investors’ money, calling reports otherwise “false and unsubstantiated.”
“Like many newly launched digital assets, the NYC Token has experienced market volatility,” Todd Shapiro, a company spokesman, said on Wednesday. “Mr. Adams has consistently emphasized transparency, accountability and responsible innovation.”
Despite claims of transparency, Adams has so far refused to reveal his token partners.
But two people close to the project confirmed that Frank Carone, a former senior adviser to Adams and a former Brooklyn Democratic Party lawyer, was closely involved in the launch. The two people spoke to The Associated Press on condition of anonymity because they were asked not to reveal the identities of the people involved in creating the token.
Shapiro confirmed to the Associated Press that one of Carone’s former clients, Yosef Seifei Zevili, a real estate investor linked to several Israeli hotels, was also part of its creation.
Zvili, who was involved Reported for the first time By Business Insider She previously owned a college dormitory in Brooklyn, which sparked complaints from students of filthy conditions and neglect. After defaulting on his mortgage, Zvili hired Carone as his attorney and was able to convert the defaulted property into ownership A city-funded homeless shelter.
Their exact role in the token launch was not immediately clear, though at least part of Zfeli’s job involved reaching out to influencers ahead of the debut. It appears that neither he nor Carone have direct experience with cryptocurrencies. Messages left with the two men were not returned.
As questions about the launch mounted this week, Adams sought guidance from Brock Pierce, the billionaire cryptocurrency investor and former “Mighty Ducks” child actor who has occasionally used his private plane as mayor.
After studying the project, Pierce said he was confident that “no one ran away with anyone’s money.”
Although he described himself as Adams’ “cryptocurrency advisor,” Pierce said he was not aware of the project until after its launch. He added: “If I had been consulted, I would have assembled a team of more qualified people who know what they are doing.”
Even within the largely unregulated world of memes, experts say projects promoted by politicians are particularly vulnerable to unsavory business practices.
He faced Argentine President Javier Miley Fraud allegations For his promotion of cryptocurrencies, which attracted thousands of investors before quickly collapsing. It also saw coins released by President Donald Trump and his wife, Melania Trump Large price fluctuations Upon release.
The number of accounts that invested in the NYC Token was far smaller than those projects, totaling just over 4,000 as of Thursday, according to Nicholas Faimann, founder of Bubblemaps, who conducted an analysis of publicly available trading records.
The analysis found that nearly 80% of those accounts purchased during the 20-minute period before Adams announced the coin but after it was available for purchase. Faiman said the window provided an advantage for insiders involved in the launch and other traders paying close attention to the new tokens.
“Political coins are driven solely by interest, and the cryptocurrency community understands that interest peaks right after launch,” Faiman said. “People know you don’t want to stay, especially for such an ambiguous prospect, like fighting anti-Americanism or anti-Semitism. What does that even mean? How are you going to accomplish that symbolically?”
the Website Because the coin says that “a portion of the proceeds” will be divided equally between three causes: anti-Semitism and anti-American “awareness campaigns,” cryptocurrency education for the city’s youth and a scholarship initiative.
He did not detail which organizations would be supported, or what percentage of proceeds would go toward charitable causes.
Adams doubted that any funds were withdrawn by the token creators.
He said the appearance of the withdrawals was the result of adjustments made by a designated market maker, an entity that buys and sells new token orders to ensure that traders are able to make purchases without significant price changes.
Market makers include FalconX, a well-known digital asset broker. The company refused to respond to registered inquiries.
As of Wednesday, the majority of accounts that invested in the currency had lost money, according to a Bubblemaps analysis. Fifteen traders dropped at least $100,000, while 10 netted $100,000.
Pierce said he still hopes that the project can be saved, adding that “the fate and results of this project will be determined in the coming days.”
But some in the cryptocurrency world had their doubts.
“It could be a legitimate project with a really bad rollout,” said Benjamin Quinn, founder of another cryptocurrency research analysis firm, Into the Cryptoverse. “But the way it was launched didn’t instill a lot of trust. It’s hard to regain trust in the cryptocurrency community.”