Behind the $470,000 loss from the "mouse warehouse": How the NYC token controversy evolved into a textbook case of "celebrity coin"

Since its launch on January 13, 2026, the NYC token introduced by former New York City Mayor Eric Adams has experienced a rollercoaster market. Its market cap plummeted from $600 million to below $100 million, a decline of over 80%. During this turmoil, a wallet attempting to front-run the dip became a “martyr”—it bought in 10 minutes before the announcement, realizing a short-term profit of $250,000, but ultimately suffered a loss of $477,000. This is not just a case of individual failure but a microcosm of how the entire event evolved into a textbook warning of “celebrity coin” risks in the crypto industry.

Timeline of Events: From Opportunity to Trap in 20 Minutes

Based on on-chain data analysis, the window from the NYC token pool being tradable to the project announcement was only 20 minutes. This period became the so-called “front-running” operation space.

The irony of this story is that the wallet seized the “opportunity” but missed the “timing.” The brief $250,000 paper profit eventually turned into a $477,000 loss.

Suspicious Signals in Team Liquidity Operations

The core controversy centers on the project’s team’s liquidity manipulation. According to monitoring data from tools like Bubblemaps:

Key details of liquidity extraction

• The team-related wallet removed about $2.5 million USDC from the liquidity pool
• This extraction occurred at the price peak
• Subsequently, the price dropped 60-70%
• The team later re-added approximately $1.5 million USDC

Two explanations from the project

The project team issued a clarification on X platform, claiming this was a “liquidity rebalancing operation,” emphasizing that funds had been redeployed to advance the project. However, on-chain data shows liquidity was only re-added after the price crash, raising community doubts about the timing.

Systemic Risks of Celebrity Coins

The NYC token incident is not isolated. Uniswap founder Hayden Adams commented on January 13, strongly criticizing celebrities and politicians for using blockchain to commit scams. He pointed out that celebrities can profit legitimately through blockchain—by issuing tokens while maintaining liquidity, providing real value to holders, and ensuring transparency.

According to reports, similar risk patterns have appeared in tokens supported by politicians, such as LIBRA and MELANIA, which are currently facing fraud lawsuits and asset freezes.

Centralization issues of NYC token

• The top five wallets hold over 92% of the total supply
• Liquidity is highly centralized
• Project disclosures are incomplete (e.g., no details on partners, fund usage, or mechanisms)

Personal Observations

The story of a $477,000 loss is noteworthy not because of the amount itself but because it exposes two issues:

First, cognitive biases among market participants. The wallet bought 10 minutes before the announcement, indicating it had an information advantage. Yet, the short-term paper gains turned into a final loss, reflecting that in highly centralized tokens, retail investors cannot predict the behavior of large holders.

Second, the transparency of project operations. “Liquidity rebalancing” sounds professional, but the on-chain time series—extraction at high points, replenishment at lows—closely resembles profit-taking patterns. Although the project’s clarification emphasizes long-term commitment, it cannot fully dispel market doubts.

Summary

The NYC token incident is a significant case in the early 2026 crypto market. From a $600 million market cap to an 80% crash, from a wallet losing $477,000 to Hayden Adams’s public criticism, the chain of events clearly illustrates the systemic risks of celebrity coins.

Three key lessons: First, highly centralized tokens are inherently unstable; second, information asymmetry remains the biggest risk in crypto markets; third, even seemingly “opportunistic” windows may be carefully crafted traps. For investors, this is less about whether a token can make money and more about how to protect oneself in highly opaque projects.