The Mantra token (OM) plummeted over 90% within an hour on Sunday, crashing from nearly $6 to below $0.4 and wiping out billions in market value.

"The timing and depth of the crash suggest that a very sudden closure of account positions was initiated without sufficient warning or notice," Mantra co-founder John Patrick Mullin stated on X.

Mantra token (OM) plummeted over 90% within an hour on Sunday, crashing from nearly $6 to below $0.4 and wiping out billions in market value.

The timing and depth of the crash suggest that a very sudden closure of account positions was initiated without sufficient warning or notice, Mantra co-founder John Patrick Mullin said on X.

"To be clear, positions were closed without any margin calls or notice, which seems odd. It wasn't a liquidation or bankruptcy scenario as far as I'm aware of," Mullin stated.

He hinted that exchange actions triggered the cascade.

In a separate official message, the project claimed that the crash was "triggered by reckless liquidations."

The crash represents one of the steepest single-day declines in crypto this year, spurring concerns over both centralized exchange practices and the stability of RWA (real-world asset) tokens.

Mantra is a Layer 1 blockchain built for tokenizing real-world assets with regulatory compliance baked in. Powered by the Cosmos SDK, it supports IBC and CosmWasm, making it interoperable and smart contract-ready across multiple chains, according to its website.

The token appears to have plummeted during low-liquidity hours to as low as $0.37, before posting a mild recovery to around $0.8, data from CoinGecko shows. Even so, it's still down more than 90% from its February peak of $8.99.

Arkham Intelligence data indicates Mantra DAO burned roughly 21 million OM tokens over separate transactions on April 2.

Rug pull or forced liquidation?

The Mantra team has flatly denied public allegations of a "rug pull" or an insider token dump. Their allocation remains locked and verifiable on-chain, the team said.

"There was no rugpull. Our token allocation is locked and remains on-chain for anyone to verify. We are fully committed to seeing Mantra succeed," the team stated on X.

Meanwhile, forced liquidations occur when leveraged trading positions fall below maintenance requirements. This triggers an automatic selling action that can accelerate price declines.

For Mantra, a key player in the RWA tokenization sector, the incident threatens its partnerships with organizations like Google Cloud and Dubai's DAMAC Group.

"Incidents like this test investor confidence and raise a critical question about how to ensure tokenized assets can be made safer for mainstream adoption," Hank Huang, CEO of Kronos Research told Decrypt.

Huang said that the alleged hack signaled that the RWA sector is "still in its infancy, with much work needed to build truly resilient infrastructure," as the "mounting pressure" to establish compliance, security, and transparency in the sector continues.

Analysts from Tiger Research declined to comment on the issue pending further details from a media event that it told Decrypt was scheduled this afternoon, Asia hours.

Still, the Mantra team now faces a significant challenge rebuilding investor trust.

"When discretionary powers are exercised without due internal and external oversight, dislocations like what recently happened can and will occur, hurting both projects and investors alike," Mullin argued.

The project did not immediately respond to Decrypt's request for comment.