MiamiCoin trading halted. After price tanked, Mayor Francis Suarez lost about $2,500
The more time passes, the more MiamiCoin fails to live up to the hopes its creators and Miami Mayor Francis Suarez had for the branded cryptocurrency.
The city didn’t create MiamiCoin, but in his broader push to brand Miami as a crypto capital, Suarez promoted MiamiCoin as a boon to the city that could possibly generate enough revenue to eliminate city taxes.
That doesn’t appear to be happening anytime soon. OKCoin, the only exchange that hosted the MiamiCoin activity, suspended the trading of city-branded cryptocurrency on Friday. It’s another blow to Miami’s crypto brand a few months after the meltdown of cryptocurrency exchange FTX.
OKCoin’s move halts the activity of a token that had no practical use and lost more than 90% of its peak value less than a year after it launched.
“Limited liquidity for these coins on our platform has created the possibility of price manipulation and fraudulent activity,” reads OKCoin’s message, published March 9. “As a result, we will suspend trading until we can address these potential risks and protect our customers.”
The post says the concern with low liquidity is that “malicious, third party actors can manipulate prices, launder stolen funds, and perpetrate other frauds.”
“While none of these risks have occurred, we wanted to get ahead of any possible misconduct,” reads OKCoin’s message. “So we moved immediately to address and stop these events from occurring.”
OKCoins also suspended trading for another struggling city-branded token, NYCCoin. Attempts to reach CityCoins were unsuccessful.
Mayor takes $2,500 personal loss
Despite losing about $2,500 himself after MiamiCoin’s value tanked, Suarez continues to tout the $5.5 million the city received as a result from MiamiCoin activity. Even though multiple cryptocurrencies have struggled with dips in value in recent months, and months after the bankruptcy of crypto exchange FTX blew up the naming-rights deal for the Miami Heat’s home arena, Suarez remains bullish on crypto’s future in South Florida.
“Despite the current challenges, we are confident that blockchain technology will be an integral part of our economy,” said Suarez, in a statement. “As an example, Bitcoin is up 70% this year. My administration remains fully committed to exploring innovative ways to build an economy that works for everyone — for generations to come.”
Wednesday afternoon, he stridently tweeted the words “INCONVENIENT TRUTH” with a tweet form Bitcoin Magazine boasting about Bitcoin outperforming 97% of the companies in the S&P 500 this year.
What happened to MiamiCoin’s donations?
Even though MiamiCoin is not a city product, Suarez promoted the benefits of the cryptocurrency when it launched. Suarez’s administration sponsored an agreement with CityCoins so that the city could accept dollars generated from MiamiCoin activity. Commissioners approved the deal in 2021.
The city government received $5.5 million from CityCoins in February 2022, money derived from a percentage of the value generated by the process that yields the city-branded token.
On Wednesday, city administrators told the Miami Herald that the dollars have been allocated to a city rental assistance program to help tenants, but the money has not been disbursed.
“We are currently finalizing some of the program logistics for the distribution parameters with the commissioners and the mayor’s office,” said Assistant City Manager Larry Spring.
Critics and defenders weigh in
Mike Bloomberg, a visiting researcher at Cornell Tech Urban Tech Hub, was critical of the MiamiCoin project from the beginning.
“This was something that could be expected, “ he said. “Much of the crypto industry, especially projects that are further removed from Bitcoin and Ethereum and some of the main coins, are struggling. The exchanges are struggling, and MiamiCoin of all of those has been struggling for over a year now.”
Bloomberg also said Suarez’s promotion helped boost the project’s initial success before MiamiCoin’s value collapsed.
“I think Mayor Suarez bears the most responsibility,” Bloomberg said. “There’s no way this project would have gotten legs without the backing of the mayor.”
Andrew Barnard, the CEO and co-founder of Bitstop and a leader of the first Bitcoin meetups in Miami back in 2013, said Suarez and the city should be commended for taking a chance and experimenting with a new project. He said he did not think there was anything scandalous or nefarious with MiamiCoin.
“If you compare it to FTX and everything else that’s going on in the space, it was about as innocent as can be, like an adorable kitten, if you compare it to some of the real scams going on in cryptocurrency,” Barnard said.
He said Suarez does not deserve criticism for his promotion of MiamiCoin.
“I’m not critical of Francis Suarez for taking the lead and putting himself out there, which is refreshing compared to most politicians who just kind of want to stay in their lane,” Barnard said.
Sami Ahmed, counsel at Miami-based PAG Law and head of its crypto and blockchain group, said Suarez should be applauded.
“His embrace of the blockchain space has been a really powerful, great sign,” said Ahmed, who is an adjunct lecturer at the Wharton School at the University of Pennsylvania. “Miami has been the home to a lot of fantastic crypto companies and blockchain projects that have brought a lot of utility to the people and to the masses. He should definitely be applauded for that.”
The MiamiCoin situation could lead public officials to more closely examine their promotion of projects such as cryptocurrency initiatives, said Tonantzin Carmona, a Rubenstein Fellow at nonprofit public policy organization Brookings Metro.
“I hope that these instances get local leaders and government officials to reflect on what they’re promoting especially to constituents and that they conduct more due diligence before doing so,” Carmona said.
This story was originally published March 22, 2023 at 8:06 PM.
