The OKcoin exchange has announced that trades in MiamiCoin will be suspended on Friday, March 17, at 2:59 a.m. Eastern Time. The exchange is also halting trades in New York City's NYCCoin, another token created on the CityCoins platform.
The exchange claimed unexpectedly low liquidity for the coins could open up "the possibility of price manipulation and fraudulent activity." While it has not identified malfeasance, the exchange said, it is halting trading "to get ahead of any possible misconduct."
"We will restore CityCoin trading as soon as possible," the exchange said. "While we don't know when that will be, we [will] provide our community with updates as soon as we have more to share."
The news is not entirely unexpected as MiamiCoin floundered not long after it launched in August 2021. Since its peak in September 2021 at roughly 6 cents, the digital coin has lost virtually all its value.
CityCoins, a nonprofit, says it created its platform to allow investors to support cities and fund local projects while earning cryptocurrency for themselves. In a raffle-type setup, the platform requires crypto miners to deposit STX, an outside cryptocurrency, in exchange for the opportunity to be rewarded in CityCoin tokens such as MiamiCoin.
MiamiCoin is down 88% from it’s all time high. If you invested $1,000 in September, it’s now worth $120. And your rent went up 36%. #BecauseMiami https://t.co/yqE2dQNbA0 pic.twitter.com/yYzP4GFbBS— Because Miami (@BecauseMiami) February 2, 2022
MiamiCoin was the first coin on the platform, in part owing to Mayor Suarez's enthusiasm for cryptocurrency. (He once called himself the "most bitcoin-friendly mayor on the planet.") Under normal operations, the city received a 30 percent allocation of the deposited cryptocurrency tied to MiamiCoin.
"It is exciting that $MIA is the first CityCoin, as Miami has long been an epicenter of culture and innovation in the U.S.," CityCoins creator Patrick Stanley said at the coin's inception. "We are confident that MiamiCoin will demonstrate to other cities that adopting new technologies can propel local initiatives, improve city infrastructure, and more."
With his sights set on transforming Miami into the "crypto capital of the world," Suarez went all in with his support for the digital token.
"Miami will benefit from the use of the MiamiCoin and from the branding that is associated with it," Suarez said during an appearance on Fox Business in July 2021. "That will go directly into our general fund so we can use that 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 to increase our quality of life for our residents."
Two months later, the crypto-friendly mayor again appeared on Fox Business, where he boasted that MiamiCoin revenue could eventually replace city taxes. He proposed, moreover, that local businesses and restaurants should start thinking of accepting MiamiCoin as a form of payment.
"It's actually generating somewhere in the vicinity of several thousand dollars every 10 minutes," Suarez said. "It could potentially generate over the course of a year upwards of $60 million."
While MiamiCoin seemed to be a profitable endeavor for the city, investors and miners dealing in the coin were already alarmed by wild swings in its value in 2021.
As Suarez continued to make his rounds promoting the digital currency, CityCoins was worried the mayor's statements would run afoul with federal regulators. According to emails from October 2021 obtained by Quartz, a CityCoins press representative requested the mayor undergo communications "training on CityCoins and MiamiCoin."
ICYMI my interview on MiamiCoin w/ @FoxBusiness— Mayor Francis Suarez (@FrancisSuarez) September 20, 2021
✅The revolutionary concept of @mineCityCoins
✅Understanding how it’s generated $5M+ for the City
✅How these benefits translate into a better quality of life for Miamians pic.twitter.com/ipewPwBMdw
"It's great that he is doing press, but he would greatly benefit from an hour session with Patrick on how to best communicate the project," the email read. "There are a few regulatory wires the mayor has tripped in recent interviews and it's really important for the sustainability of the project that he is better prepared."
During an interview with cryptocurrency news site CoinDesk in November 2021, Suarez said the digital currency had already generated $21 million for the city. He then announced the city would stake some of that sum in bitcoin and hand 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," Suarez said. "We're going to give them bitcoin directly from the yield of MiamiCoin."
Another CityCoins-based token, NYCCoin, emerged under pro-crypto New York City Mayor Eric Adams, who pledged to take his first paychecks in bitcoin. Like MiamiCoin, the value of the NYC-branded coin has steadily declined. There were also discussions about launching AustinCoin or ATXCoin in the Texas capital.
The City of Miami received its first donation from CityCoins, a $5.25 million sum, in early February 2022, cashing out shortly before a cryptocurrency market plunge. The city commission voted to allocate the funds to a new rental assistance program.
When MiamiCoin's value descended soon after, Suarez did not appear as confident as he previously was about the future of the Miami-inspired token. At that time, the coin was trading at roughly four-tenths of a cent. The mayor told the Miami Herald he was not sure if "it's going to work or not," a stark contrast from his stance a few months earlier.
The mayor maintained that he did not push MiamiCoin on investors and that his interest in it was driven by its capacity to generate revenue for the city. "I just think that's a novel idea. Whether the tokenomics work is a much more complicated macro issue," he said in a May 2022 CoinDesk interview.
By September 2022, the coin's value had dropped more than 99 percent from its peak. As of Thursday afternoon, March 16, it was trading at less than three one-hundredth of a cent.
After the planned trading halt, holders of MiamiCoin and NYCCoin can still keep the tokens in their account or withdraw them and trade them on the ALEX decentralized exchange, OKcoin said.