
The cryptocurrency market underwent a significant correction, with Mantra's OM token experiencing an unprecedented 90% drop in value within a single day, resulting in a loss of over $5 billion from its total market capitalisation.
This sudden price decline raised concerns about insider selling, particularly after large transfers of OM tokens to Binance wallets occurred immediately following the market crash. The drastic devaluation of the OM token has sparked discussions regarding the causes of the crash and its implications for the project's future development.
On Monday, April 14, Mantra DAO moved approximately $26.95 million worth of OM tokens to a Binance wallet, just after the token’s value fell from $6.27 to $0.72. However, this dramatic price drop has caused many analysts to question what motivates such large transfers. Given that the team controls almost 90% of the OM token supply, it’s suspicious that insiders haven’t cashed out on the price collapse which further contributed to the market decline.
However, these transfers are complicated further by their timing. Mantra DAO also moved nearly 4 million OM tokens to OKX, another cryptocurrency exchange, just before the price drop. The fact that this movement of tokens to centralised exchanges prior to the major crash also aligns with the increasing fears that there is insider manipulation going on, since these exchanges make it harder to know what is happening once the tokens are deposited precisely.
JP Mullin rejected all allegations of insider trading involving his team and investors as the Mantra CEO. Mullin explained that forced liquidation triggered by cryptocurrency exchanges caused OM tokens to record a dramatic price fall. The exchange performs automatic position sales when traders cannot meet margin requirements through liquidations. The substantial price decrease occurred as a result of market forces rather than sell-offs conducted by Mantra’s team members, according to Mullin’s explanation.
Initially, Mullin’s explanation was supported by Binance, which stated that cross-exchange liquidations played a significant role in the price crash.
However, competing exchanges like OKX provided a different point of view. According to the platform, the large number of tokens sent to exchanges and changes with OM's tokenomics could also be responsible for the price drop. However, these differing opinions from the major players in the cryptocurrency space have split the market about the real cause of the crash.
However, the truth behind the OM token’s collapse remains unclear as the investigation continues. The varying information provided by exchanges underscores the complexity of the case since exchanges commonly have limited capabilities to track transactions once they are transferred off-chain. Despite the ongoing investigations by the authorities and exchanges, the substantial loss of market value and growing doubts around the fast fall of the token have compromised investor confidence in Mantra. Only time will tell how things will work out for them now.