Legality
The distributor of the coin, National Collector's Mint, advertises the item as "legally authorized government issue" and marks the coin with the valuation of "One Dollar". This is seen as being a deliberate attempt to mislead American consumers into believing it is a legal tender coin produced by the United States Mint and is worth one U.S. dollar.
In reaction to advertising for this product, the U.S. Mint, as well as the attorneys general of various U.S. states, released a statement that the coin is not U.S. government issue. Furthermore, since the Northern Mariana Islands is a United States Commonwealth, it cannot mint its own legal tender currency (it uses regular American money).
The distributors also purport that the coins have been struck using silver recovered from a vault in the rubble of the World Trade Center. The validity of this claim has not been confirmed. Distributors warn that the minting of the coin will cease once the quantity of recovered silver has been exhausted, and have therefore placed a limit on the number of coins that can be ordered per person. The coins are not solid silver, but are silver clad (0.0001 inch (2.5 micrometre) layer). Actual silver content is 45 mg, or 0.00145 troy oz.
The territorial government of the CNMI has made money from commissioning commemorative, non-tender coins through SoftSky and National Collector's Mint in the past, but does not claim the right to commission legal tender coinage. Some past coins issued by SoftSky, such as the 1933 Gold Double Eagle coin, have also incurred marketing controversy.
In October 2004 the attorney general of New York, Eliot Spitzer, obtained a court order against National Collectors Mint (a Port Chester, New York company) to halt sales of the "Freedom Tower Silver Dollar" coin, citing it as fraudulently advertised. Spitzer also alleged that the company's sales contacts had asserted that the coin is legal tender. On October 13, 2004, Spitzer obtained a temporary order halting the company from advertising or selling the coin. On November 9, State Supreme Court Justice Joseph R. Cannizzaro ruled that the company had engaged in deceptive and fraudulent marketing practices, and ordered the company to terminate its misleading advertising of the coin.
An investigation as to the silver content and the origin of the silver in the coins was started. The attorney general's office easily determined that the coin was only silver clad, but as of 2005 the veracity of the claim that this silver came from a World Trade Center bank vault had not been determined.
As a result of the controversy and legal action over the Freedom Tower coin, CNMI governor Juan N. Babauta suspended the SoftSky contract on November 13, 2004. On December 2, Babauta ended the contract. Before this course of events, the CNMI government made about $160,000 off the deal.
Other groups have also released silver Freedom Tower coins, but not with a denominational value or advertised as government issue.
The CNMI coin was named "Stupid Investment of the Week" by CBS MarketWatch on September 24, 2004.
Read more about this topic: Freedom Tower Silver Dollar