Mantra OM Token Collapse Reveals Serious Liquidity Challenges in Crypto

Mantra’s OM token recently suffered a drastic fall of over 90%, emphasising critical liquidity issues within the cryptocurrency sector. Allegations of market manipulation emerged as substantial token transfers to exchanges occurred before the crash. Mantra’s CEO attributed the collapse to forced liquidations during low-liquidity periods. The situation raises concerns about systemic vulnerabilities affecting the entire crypto market, as highlighted by leading experts.

The recent crash of the Mantra (OM) token, which plummeted by over 90% from approximately $6.30 to below $0.50 on April 13, underscores significant liquidity concerns within the cryptocurrency sector. This dramatic decline has led to allegations of market manipulation, as investors express their frustration. Blockchain analysts are currently investigating the underlying causes, which, according to Bitget CEO Gracy Chen, reflect systemic issues prevalent across the industry.

In the lead-up to the crash, blockchain analytics firm Lookonchain reported that 17 wallets, including two tied to Laser Digital, transferred 43.6 million OM tokens, valued at around $227 million, to exchanges. However, Mantra CEO John Mullin has dismissed claims of large-scale token sales by project investors, maintaining that the team is examining the incident closely.

Following the crash, the Mantra team issued a statement clarifying that no token sales occurred from their side, yet they neglected to address the swift movement of OM tokens prior to the downturn. Mullin attributed the token’s collapse to “massive forced liquidations” on centralized exchanges during times of low liquidity, asserting that one specific exchange, believed not to be Binance, played a pivotal role.

Gracy Chen further indicated that the considerable amount of tokens transferred to various exchanges raised alarms, particularly concerning potential “insider dumping”. Weekend liquidity challenges have also affected leading cryptocurrencies like Bitcoin (BTC). The lack of trading volume over weekends, coupled with Bitcoin’s continuous liquidity, led to its correction below $75,000 on April 6, exacerbated by global trade tensions, according to Lucas Outumuro from IntoTheBlock.