MANTRA's OM Token Collapses by 90%, Market Cap Shrinks by Over $6 Billion

The real-world tokenized asset blockchain saw its market cap shrink by over $6 billion during the crash. MANTRA's team has pointed to forced liquidations by centralized exchanges as the cause

The native token of real-world tokenized asset blockchain MANTRA had a 90% crash on April 13, seeing its market cap shrink by over $6 billion.

The project's own community lead Dustin McDaniel played down rumors that the project's team had sold tokens, shortly before the project's public-facing Telegram group became inaccessible.

"No one on the team sold tokens. We're heartbroken to see the community in pain, but we're pulling together to work on next steps. We'll provide an update on X shortly," said McDaniel.

The project's co-founder John Mullin said in a tweet that the token's market movements were triggered by "reckless forced closures" on account holders.

"The timing of this eventuality, during low-liquidity hours on Sunday evening UTC (early Monday morning Asia time), speaks volumes of either negligence at best, or possibly intentional market positioning taken by centralized exchanges," he added.

suggesting that the timing of the crash during low-liquidity hours on Sunday evening UTC (early morning Asia time) speaks "either negligence at best, or possibly intentional market positioning taken by centralized exchanges."

"One exchange in particular is to blame here - it's not Binance. I'll share more details during our upcoming Community Connect on X."

The token briefly recovered above $1 after the crash but has since dropped back to around $0.70.

Some traders have alleged that the token collapse was a "rug pull," while others speculated that the MANTRA team had used their tokens as collateral for a large loan from a centralized exchange, which led to a margin call after a loan risk parameter change.

However, Mullin denied these theories, stating that "the team did not have a large loan outstanding" and haven't orchestrated a rug pull.

"Tokens remain locked and subject to the published vesting periods. OM's tokenomics remain in place, as shared last week in our latest token report. Our token wallet addresses are online and visible."

Averages displayed on Lookonchain show that at least 17 wallets deposited 43.6 million OM into crypto exchanges starting April 7, rendering 4.5% of the circulating supply.

According to Spot On Chain, certain OM whales moved 14.27 million tokens to OKX three days before the crash. These same whales had purchased 84.15 million OM for $564.7 million in March. After the 90% price drop, their remaining 69.08 million OM was worth just $62.2 million, representing a potential loss of $406.3 million.

Insomniac, governance lead for growth firm Castle Labs, identified three wallets that sent millions of dollars worth of OM tokens to exchanges. One wallet received around $36 million worth of OM from a Binance address on March 21, then transferred about 4.3 million tokens to OKX across 8 transactions on Saturday.

The variable interest rate on a 30-day loan on Binance was 0% at the time, while the interest rate on a seven-day loan was 3%.

One X user claimed that he had personally lost over $50,000 in the crash, while another said that he lost $26,000.

"I wish I could say that I'm used to seeing crypto tokens lose 90% of their value, but unfortunately, this is a first for me. I've never seen anything quite like it, and I'm sure many of you feel the same way," said the X user.

The project had previously faced allegations that it was controlling large portions of the token's circulating supply to manipulate the token's price.

"OM has been in circulation since August 2020. Longer than most of these people have been in crypto. Funny how quickly memories fail people when they're busy trying to spin a narrative that suits them," said Mullin.

Some investors had also pointed to the project's total value locked (TVL) of only around $13 million compared to its token's fully-diluted value of $9.5 billion as a potential warning sign.

In January, MANTRA and investment conglomerate DAMAC signed a $1 billion deal to tokenize the investment group's various assets. The project also received a virtual asset service provider license from Dubai's Virtual Assets Regulatory Authority in February.

OM hit an all-time high of just under $9 on February 23 and is now down over 91% from that figure.

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This article was written by Benzinga's Smart Money Flows and Tip