This week’s MANTRA Meltdown has left the crypto market and regulators seeking answers. The loss of 90% of value from the OM token stunned the market during Sunday trading. Now, amid a flurry of social media accusations, highlighted by chain evidence, a bigger picture is beginning to form. One that seems to indicate more than just bad luck. Here’s what you need to know
What Is MANTRA (OM)? The RWA-Focused Blockchain Explained
MANTRA (OM +38.78%) entered the market as a Layer 1 blockchain to support the Real World Assets (RWA) ecosystem. The tokenization of real-world assets refers to bringing non-chain items onto the blockchain. In some instances, this could mean making the ownership of an item or asset a token.
The RWA space continues to expand, and MANTRA was touted as an enterprise-level solution to the market. However, it now looks like there may have been alternative motives as evidence continues to stack up against the platform’s developers and community members.
Why Did the MANTRA (OM) Token Crash 90% Overnight?
The dust has begun to settle on the MANTRA token crash that saw the OM token drop from $6.30 down to $0.38 in less than 24 hours. The abruptness and size of these losses have left social media sleuths and crypto analysts speculating on foul play. Considering that the developers and their partners held the majority of the tokens, these allegations are warranted.
Main Causes Behind the MANTRA (OM) Token Collapse
Several reasons have led to the MANTRA meltdown that are known so far. For one, the overuse of trading bots has made instances like this more common. These automated protocols execute trades at predetermined values. As such, they can be triggered by sudden market movements. Sadly, these bots can easily trigger a wave of sell-offs.
High-Risk Loans Fueled the OM Token Meltdown
According to exchange records, the MANTRA token holders had made some questionable maneuvers in the days leading up to the crash. It was noted that the group had taken out several high-risk loans using the OM token as collateral. This situation meant that as OM tokens began to sell, their lenders called the loans in to meet the new collateral requirements, furthering the OM death spiral.
Insider Trading Accusations Surround MANTRA Token Crash
Many believe that the company and its partners were involved in insider trading. However, the CEO, John Mullin, denied reports suggesting that anything nefarious was behind the sudden losses.
This denial has been met with skepticism as blockchain analysts pointed out that the two main culprits in the crash, Laser Digital and Shorooq, were investors in the MANTRA Ecosystem Fund (MEF). Notably, the fund secured $109 million since it was announced in April.
Source – X
Laser Digital
Laser Digital, backed by Nomura, has been a strategic partner of MANTRA since May 2024. The group provided support to the project and held a significant portion of OM tokens before the crash. What makes the situation precarious is that right before the crash, it’s alleged that Laser Digital moved $227M in OM tokens to the CEXs Binance and OKX.
In total, 43.6 million OM tokens were moved from wallets that are allegedly controlled by Laser Digital. Additional evidence put forth by another independent source, ZachXBT, shows a sharp uptick in OM-collateralized loan requests by connected wallets before the crash.
Shorooq Partners
Shorooq Partners is another MANTRA investor that allegedly made some questionable maneuvers prior to the losses. According to LookonChain data, a wallet that was tied to the company’s founding partners, Shane Shin, received a transfer equaling 2M OM tokens on April 13, only hours before the crash. In response to these allegations, Shorooq Partners stated that these were wallet-to-wallet transfers within their community.
Did MANTRA Plan the Crash? Token Supply and Inflation Moves
There are others who say this scam has been in the works for some time. They noted that back in October 2024, MANTRA doubled the total supply of tokens. This maneuver raised the token total from 888,888,888 to 1,777,777,777 OM tokens. Additionally, they eliminated the limited supply structure and introduced an 8% inflationary approach.
Was the MANTRA Crash a Rug Pull?
When MANTRA developers were confronted with rug pull allegations, they quickly stated that none of the developers, members of the MANTRA association, primary key investors, or advisers sold their tokens. The developers claimed that they were caught off guard, like everyone else, and that they have no intention of abandoning the project or the community.
Why the Timing of the MANTRA Crash Raises Red Flags
If the MANTRA team knew nothing about the impending crash, the timing of certain moves is surely questionable. For example, the crash occurred during the low liquidity hours on Sunday. MANTRA claims that this timing indicates larger market manipulation at play, while others state that this timing just furthers their case against the developers.
Blockchain Evidence Points to Insider Activity in MANTRA Crash
Arkham data states with confidence that on April 11th, a wallet linked directly to Laser Digital with the beginning tag “0x84EE7,” sent 6.5M OM to the wallet address “0xB37DB.” From there, the tokens were sent to OKX, where they were liquidated. This data disproves the theory that it was a buyer sell-off that spurred the crash. Instead, it supports an insider trading scheme that involved Laser Digital and others.
Are Crypto Exchanges to Blame for the MANTRA (OM) Crash?
Others believe that the exchanges are partly at fault for his crash. However, both Binance and OKX have fought these claims. OKX even went as far as to share that they flagged OM token loan activity across multiple CEXs since October 2024.
In response, MANTRA developers stated that the exchange settings made their situation worse and led to further selling when the market reacted sharply. They claim that flagging their token has already raised concerns and was an unnecessary step that led to the problem rather than preventing one.
Binance
Binance defended its efforts by sharing that it initiated risk control measures on OM token trading early on. Their research also found that the developers were engaged in questionable activity, like extended cross-chain liquidations. They also noted the larger amount of leveraged positions that OM token holders had on Binance and other CEXs.
MANTRA CEO and Partners Deny Involvement in Token Crash
Despite the growing amount of evidence that continues to be brought to the public, MANTRA’s CEO, John Mullin, has stood his ground in regard to his team’s innocence. They were quickly followed by Laser Digital denying the allegations. Notably, both parties denied having any connection to the wallets that Arkham Intelligence’s data provided.
What’s Next for MANTRA After the $5B Token Crash?
Now that the smoke has settled, the MANTRA project may be on its way out the door. A project rarely regains consumer confidence after such a sudden and crushing blow to the community. Despite the odds, MANTRA developers have floated some recovery ideas. The concepts include token buybacks and burns, which are commonly used to help control token value.
Why the MANTRA Crash Is Being Compared to LUNA
The crypto community has been quick to point out some similarities between the sudden and unexpected MANTRA meltdown and the LUNA token crash that happened in 2022. The unexplained token transfers before the crash and the sudden recovery that turned out to be a bull trap are factors that the community has pointed out recently.
Is OM’s Recovery a Bull Trap or the Start of a Comeback?
There was some sparkle of light at the start of the day today as OM began with a strong rally that had some believing that it was going to recover from its losses. However, the momentum behind this maneuver seems to be fizzing out fast.
MANTRA Crash Fallout: Market Cap Losses and Liquidations
The flurry of allegations and growing evidence against MANTRA and its associates has made this scenario a central point for both traders and regulators. In total, a $5B OM market cap has been lost. Additionally, liquidated futures positions reached $75.9M, adding to the woes.
Why Investor Confidence in MANTRA May Be Gone for Good
It’s hard to envision any scenario in which MANTRA can climb out of this hole without first explaining some of the questionable actions that occurred leading up to the losses. It’s more likely that the developers will exit the project in the coming days as regulators begin to ask more questions and as the screams from frustrated traders reach a fevered pitch.
For these reasons and many more, you can expect to see the MANTRA Meltdown further investigated in the coming weeks.
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