Cryptocurrency Exchange Suspends Trading of Suarez-Backed MiamiCoin

Cryptocurrency Exchange Suspends Trading of Suarez-Backed MiamiCoin

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Trading in MiamiCoin, a digital token once hailed by Mayor Francis Suarez as a revolutionary new revenue stream for the city, is scheduled to stop at the only centralized crypto exchange backing the languishing coin.

The OKcoin exchange has announced that trading in MiamiCoin will be suspended on Friday, March 17 at 2:59 am ET. The exchange is also halting trades in New York City NYCCoin, another token created on the CityCoins platform.

The exchange claimed that the unexpectedly low liquidity of the coins could open up “the possibility of price manipulation and fraudulent activity.” While it has not identified any malfeasance, the exchange said, it is halting trading “to preempt any potential misconduct.”

“We will restore CityCoin trading as soon as possible,” said the exchange said. “Though we don’t know when that will be, [will] provide our community with updates as soon as we have more to share.”

The news is not entirely unexpected, as MiamiCoin flopped shortly after its launch in August 2021. Since its peak in September 2021 at roughly 6 cents, the digital currency has lost virtually all of its value.

CityCoins, a nonprofit organization, says it created its platform to allow investors to support cities and fund local projects while earning cryptocurrency for themselves. In a raffle-like setup, the platform requires cryptominers to deposit STX, a third-party cryptocurrency, in exchange for a chance to be rewarded with CityCoin tokens like MiamiCoin.

MiamiCoin was the first coin on the platform, partly due to Mayor Suárez’s enthusiasm for cryptocurrencies. (He once called himself the “most bitcoin-friendly mayor on the planet.”) Under normal operations, the city received an allocation of 30 percent of the deposited cryptocurrency linked to MiamiCoin.

“It is exciting that $MIA is the first CityCoin, as Miami has long been an epicenter of culture and innovation in the United States,” CityCoins creator Patrick Stanley said at the coin’s inception. “We are confident that MiamiCoin will demonstrate to other cities that the adoption of new technologies can drive local initiatives, improve the city’s infrastructure and more.”

With his sights set on transforming Miami into the “crypto capital of the world”, Suárez bet with all his support for the digital token.

“Miami will benefit from the use of MiamiCoin and the branding associated with it,” Suárez said during an appearance on fox business in July 2021. “That will go directly into our general fund so we can use it to alleviate homelessness… We can focus on policing and increasing our police force… and we can focus on a variety of other things that the city does very well in increasing the quality of life for our residents.”

Two months later, the crypto-friendly mayor appeared again on Fox Business, where he bragged that MiamiCoin revenue could eventually replace city taxes. He further proposed that local businesses and restaurants should start thinking about accepting MiamiCoin as a form of payment.

“It’s actually generating somewhere in the neighborhood of several thousand dollars every 10 minutes,” Suarez said. “It could potentially generate over the course of a year in excess of $60 million.”

While MiamiCoin appeared to be a profitable endeavor for the city, investors and miners who traded in the coin were already alarmed by the wild swings in its value in 2021.

As Suárez continued to promote the digital currency, CityCoins was concerned that the mayor’s statements would run afoul of federal regulators. According to emails from October 2021 obtained by Quartz, a CityCoins press representative requested the mayor undergo “CityCoins and MiamiCoin training” in communications.

“It’s great that he’s doing press, but he would greatly benefit from an hour session with Patrick on how to better communicate the project,” the email read. “There are some regulatory wires that the mayor has stumbled across in recent interviews and it’s really important for the sustainability of the project that he’s better prepared.”

during a interview With cryptocurrency news site CoinDesk in November 2021, Suárez said that the digital currency had already generated $21 million for the city. He then announced that the city would stake part of that sum in bitcoin and pay out a dividend to Miami residents. (The plan has yet to come to fruition.)

“We are going to create a digital wallet for our residents,” said Suárez. “We will give them bitcoins directly from the performance of MiamiCoin.”

Another CityCoins-based token, NYCCoin, emerged under pro-crypto New York City mayor Eric Adams, who pledged to receive his first bitcoin paychecks. Like MiamiCoin, the value of the NYC branded coin has been steadily declining. There were also discussions about the release austincoin or ATXCoin in the capital of Texas.

The City of Miami received its first CityCoins donation, a $5.25 million sum, in early February 2022, cashing in shortly before a cryptocurrency market crash. The city commission voted to allocate the funds to a new rental assistance program.

When the value of MiamiCoin dipped shortly thereafter, Suárez did not seem as confident as before about the future of the Miami-inspired token. At the time, the coin was trading at approximately four-tenths of a cent. The mayor told the The New Herald he was unsure if “it’s going to work or not”, a stark contrast to his stance a few months earlier.

The mayor maintained that he did not pitch MiamiCoin to investors and that their interest was driven by its ability to generate revenue for the city. “I just think it’s a novel idea. Whether tokenomics works is a much more complicated macro problem,” he said in May 2022. CoinDesk interview.

By September 2022, the value of the coin had fallen more than 99 percent from its peak. As of Thursday afternoon, March 16, it was trading at less than three-hundredths of a cent.

After the planned trading suspension, MiamiCoin and NYCCoin holders can still keep the tokens in their account or withdraw and trade them on the ALEX decentralized exchange, OKcoin said.


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