Possibly a cent that at one time or another was imbedded into a Good Luck Charm. Kinda like this: As such, it would just be post minting damage.
An encased coin seems plausible, but examples I've found don't seem to damage the coin this much. I've seen buttons made from IHCs that are more extreme though.
The rims are cut back like train wheels to hold the cent in place in the good luck token, thus it's damaged . Any alterations to any surface the coin is damaged .
The rims aren't "cut back" at all. Encasements are made using an aluminum blank with a hole in it and the cent is placed in it and loaded into a press. The dies in the press also have a hole in them so they don't flatten the coin, but the hole is often a little smaller than the diameter of the coin. When the piece is struck the hole in the aluminum tries to collapse toward the center, and the edge of the coin is forced outward. This forces the two pieces together and "locks" them tight. But it does flatten the rim of the coin. Sometimes the design on the die comes all the way tothe edge of the hole and you will see part of the design impressed onto the rim of the coin.
It is in fact an encased coin. Here is one that Fred Weinberg has had in hand and as soon as I handed it to him he handed it back and told me to a TEE what Conder101 stated above. Encased Reverse by Jim M posted Jan 11, 2015 at 11:03 AM
