It didn’t take long for crypto observers to declare NYC Token had all the hallmarks of a dreaded rugpull—a common scam where someone launches a cryptocurrency then quickly extracts the value, leaving retail investors with worthless tokens. According to Nicolas Vaiman, the founder of the crypto analytics firm Bubblemaps, as well as blockchain transactions reviewed by Fortune, the developer likely netted around $1 million in proceeds after withdrawing profits from the market. 

Though it remains unclear whether Adams received any of the proceeds, the incident recalled similar debacles of celebrity memecoin launches, including Argentina President Javier Milei’s Libra scandal in early 2025 and Haliey ‘Hawk Tuah girl’ Welch’s failed launch in late 2024. “This is such an obvious rug,” said Vaiman. 

A representative for Adams did not respond to a request for comment. 

$NYC Token

When Adams revealed his “NYC Token” project to a gaggle of reporters in Times Square on Monday morning, he was short on specifics. The former mayor declined to clarify who else was involved with the cryptocurrency, and instead pointed to a website without functioning buttons. He added that the project would teach New York’s children about the virtues of blockchain technology and fund initiatives fighting antisemitism. 

Adams has long been a crypto booster. He started his mayoral term by declaring he would receive his first three paychecks in Bitcoin and palling around with Brock Pierce, the former Mighty Ducks star who earned his fortune on blockchain projects including the stablecoin Tether. 

Eddie Cullen, a former NYC mayoral candidate and founder of the crypto company Crescite, claims that he began sharing ideas with Adams’s inner circle for a NYC token around June 2025. A press release from his political action committee Innovate NY describes plans to support a trademarked initiative called NYC Token that would “channel blockchain technology to drive new city revenue,” and Cullen shared a presentation with Fortune detailing the project that he says he also shared with Adams’s team. 

Cullen says that he had no warning about Monday’s announcement and plans to send Adams a cease-and-desist. “I’m going to hold him accountable,” he told Fortune. “I’m more shocked that he would just go out and do this.” 

It remains unclear who besides Adams was involved with the token’s launch, with a new website listing C18 Digital as an associated entity. Delaware corporation records indicate that a limited liability company called C18 Digital was incorporated on Dec. 30, 2025. 

The muddled history of the token’s origination is just the tip of the iceberg. When a cryptocurrency launches, the developers behind the project will typically fund the new market with other assets such as USDC, a U.S. dollar-backed stablecoin, or the popular cryptocurrency Solana in a so-called “liquidity pool” so that users can both buy and sell the new token. 

But the NYC Token did not follow that approach, instead doing a one-sided liquidity pool that only comprised the token itself. When users began to buy it, injecting the liquidity pool with USDC, a wallet associated with the developer withdrew $2.5 million of those USDC. According to Vaiman, this kind of sell-off is more subtle because it doesn’t look like the wallets are selling the token itself. Hayden Davis— the infamous figure behind the Argentina Libra scandal, which saw investors lose $250 million in a memecoin associated with the country’s president—used a similar approach. 

After reports of a rugpull went viral on X on Monday night, a new account associated with the token announced that it had added new funds to the liquidity pool. Still, according to Vaiman, the developers likely were able to net around $1 million in profit. 

“I truly have no explanation on why they did it,” Vaiman said. “Is this as simple as just pure grift? Maybe I’m overoptimistic and I don’t want to believe that’s the case, but maybe this is what it is.” 

The backlash reflected the overarching stakes in determining the balance of power within the federal government and the path of the U.S. economy at a time of uncertainty about inflation and a slowing job market. This has created a sense among some Republican lawmakers and leading economists that the Trump administration had overstepped the Fed’s independence by sending subpoenas.

The criminal investigation — a first for a sitting Fed chair — sparked an unusually robust response from Powell and a full-throated defense from three former Fed chairs, a group of top economic officials and even Republican senators tasked with voting on Trump’s eventual pick to replace Powell as Fed chair when his term expires in May.

White House press secretary Karoline Leavitt told reporters that Trump did not direct his Justice Department to investigate Powell, who has proven to be a foil for Trump by insisting on setting the Fed’s benchmark interest rates based on the data instead of the president’s wishes.

“One thing for sure, the president’s made it quite clear, is Jerome Powell is bad at his job,” Leavitt said. “As for whether or not Jerome Powell is a criminal, that’s an answer the Department of Justice is going to have to find out.”

Critics see Trump as trying to control the Fed

The investigation demonstrates the lengths the Trump administration is willing to go to try to assert control over the Fed, an independent agency that the president believes should follow his claims that inflationary pressures have faded enough for drastic rate cuts to occur. Trump has repeatedly used investigations — which might or might not lead to an actual indictment — to attack his political rivals.

The risks go far beyond Washington infighting to whether people can find work or afford their groceries. If the Fed errs in setting rates, inflation could surge or job losses could mount. Trump maintains that an economic boom is occurring and rates should be cut to pump more money into the economy, while Powell has taken a more cautious approach in the wake of Trump’s tariffs.

Several Republican senators have condemned the Department of Justice’s subpoenas of the Fed, which Powell revealed Sunday and characterized as “pretexts” to pressure him to sharply cut interest rates. Powell also said the Justice Department has threatened criminal indictments over his June testimony to Congress about the cost and design elements of a $2.5 billion building renovation that includes the Fed’s headquarters.

“After speaking with Chair Powell this morning, it’s clear the administration’s investigation is nothing more than an attempt at coercion,” said Sen. Lisa Murkowski, R-Alaska, on Monday.

Jeanine Pirro, U.S. attorney for the District of Columbia, said on social media that the Fed “ignored” her office’s outreach to discuss the renovation cost overruns, “necessitating the use of legal process — which is not a threat.”

“The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s,” Pirro posted on X, although the subpoenas and the White House’s own statement about determining Powell’s criminality would suggest the risk of an indictment.

A bipartisan group of former Fed chairs and top economists on Monday called the Trump administration’s investigation “an unprecedented attempt to use prosecutorial attacks” to undermine the Fed’s independence, stressing that central banks controlled by political leaders tend to produce higher inflation and lower growth.

“I think this is ham-handed, counter-productive, and going to set back the president’s cause,” said Jason Furman, an economist at Harvard and former top adviser to President Barack Obama. The investigation could also unify the Fed’s interest-rate setting committee in support of Powell, and means “the next Fed chair will be under more pressure to prove their independence.”

The subpoenas apply to Powell’s statements before a congressional committee about the renovation of Fed buildings, including its marble-clad headquarters in Washington. They come at an unusual moment when Trump was teasing the likelihood of announcing his nominee this month to succeed Powell as the Fed chair and could possibly be self-defeating for the nomination process.

While Powell’s term as chair ends in four months, he has a separate term as a Fed governor until January 2028, meaning that he could remain on the board. If Powell stays on the board, Trump could be blocked from appointing an outside candidate of his choice to be the chair.

Some Senate Republicans express doubts

Powell quickly found a growing number of defenders among Republicans in the Senate, who will have the choice of whether to confirm Trump’s planned pick for Fed chair.

Sen. Thom Tillis, a North Carolina Republican and member of the Senate Banking panel, said late Sunday that he would oppose any of the Trump administration’s Fed nominees until the investigation is “resolved.”

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said.

Sen. Dave McCormick, R-Pa., said the Fed may have wasted public dollars with its renovation, but he said, “I do not think Chairman Powell is guilty of criminal activity.”

Senate Majority Leader John Thune offered a brief but stern response Monday about the tariffs as he arrived at the U.S. Capitol, suggesting that the administration needed “serious” evidence of wrongdoing to take such a significant step.

“I haven’t seen the case or whatever the allegations or charges are, but I would say they better, they better be real and they better be serious,” said Thune, a Republican representing South Dakota.

Powell could stay on the Fed board, possibly thwarting Trump

If Powell stays on the board after his term as chair ends, the Trump administration would be deprived of the chance to fill another seat that would give the administration a majority on the seven-member board. That majority could then enact significant reforms at the Fed and even block the appointment of presidents at the Fed’s 12 regional banks.

“They could do a lot of reorganizing and reforms” without having to pass new legislation, said Mark Spindel, chief investment officer at Potomac River Capital and author of a book on Fed independence. “That seat is very valuable.”

Powell has declined at several press conferences to answer questions about his plans to stay or leave the board.

Scott Alvarez, former general counsel at the Fed, says the investigation is intended to intimidate Powell from staying on the board. The probe is occurring now “to say to Chair Powell, ’We’ll use every mechanism that the administration has to make your life miserable unless you leave the Board in May,’” Alvarez said.

Asked on Monday by reporters if Powell planned to remain a Fed governor, Kevin Hassett, director of the White House National Economic Council and a leading candidate to become Fed chair, said he was unaware of Powell’s plans.

“I’ve not talked to Jay about that,” Hassett said.

A weaker Fed could mean a weaker economy

A bipartisan group of former Fed chairs and top economists said in their Monday letter that the administration’s legal actions and the possible loss of Fed independence could hurt the broader economy.

“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” the statement said.

The statement was signed by former Fed chairs Ben Bernanke, Janet Yellen, and Alan Greenspan, as well as former Treasury Secretaries Henry Paulson and Robert Rubin.

Still, Trump’s pressure campaign had been building for some time, with him relentlessly criticizing and belittling Powell.

He even appeared to preview the shocking news of the subpoenas at a Dec. 29 news conference by saying he would bring a lawsuit against Powell over the renovation costs.

“He’s just a very incompetent man,” Trump said. “But we’re going to probably bring a lawsuit against him.”

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AP writers Lisa Mascaro and Joey Cappelletti contributed to this report.

The acquisitions are meant to aid the blockchain network’s stablecoin strategy, said Polygon Labs CEO Marc Boiron and Polygon Foundation founder Sandeep Nailwal in an interview. The Seattle-based Coinme, which specializes in converting cash into crypto and is known for its work with crypto ATMs, has a suite of money transmitter licenses in the U.S. Meanwhile, New York-based Sequence builds out blockchain infrastructure, including crypto wallets.

Polygon Labs’ acquisitions of the two startups puts it in competition with the fintech giant Stripe, said Nailwal. Over the past year, the payments giant bought a stablecoin startup, a crypto wallet firm, and backed its own blockchain focused on payments. The Stripe acquisitions signalled an intention to own every layer of the stablecoin stack, from the servers that process payments to the accounts where users hold crypto. 

“It’s a reverse Stripe in a way,” Nailwal said of Polygon’s stablecoin play. Stripe first acquired its stablecoin startups and then built out its own blockchain. In contrast, Polygon already has a longstanding network of blockchains, and it’s bringing on startups to build on top of it. “Polygon Labs is becoming a full-blown fintech company,” said Nailwal.

Stablecoin shift

The push from Polygon Labs into payments comes amid a wave of hype for stablecoins, or cryptocurrencies that are pegged to real-world assets like the U.S. dollar. Especially after President Donald Trump signed into law in July a new bill regulating the tokens, fintechs, tech companies, and even banks have said they’ll launch their own stablecoins, which proponents say are an upgrade over decades-old financial infrastructure.

Polygon Labs, whose blockchain network sits on top of Ethereum, is aiming to ride this wave of enthusiasm. Best known for its prominence during the NFT boom of 2021 and 2022, Polygon has made significant investments in payments over the past year, even poaching Stripe’s head of crypto, John Egan. 

The deal for Coinme, its latest payments play, was for between $100 and $125 million, reported CoinDesk, which implies that the price for  Sequence was somewhere between $125 and $150 million. But Boiron, the CEO of Polygon Labs, pushed back on the reporting. “Almost everything that CoinDesk wrote in that article is wrong,” he said.

He also said he wasn’t worried about Coinme’s legal struggles. In 2025, regulators in California and Washington targeted the crypto company for violations that included a failure to stop customers from taking out more than $1,000 in a day from the firm’s affiliated crypto ATMs. Washington regulators agreed to stay a cease-and-desist order against Coinme a month after going after the startup. 

“I think they go far beyond what is required,” said Boiron, in reference to Coinme’s compliance regime. “On the back end, the way that they handle being able to limit risk to users, I think is state of the art.”