The cryptocurrency market was rocked by an unexpected and very negative event: the Mantra (OM) token, which is linked to a blockchain platform for tokenizing real-world assets (RWAs), collapsed by 90% in just a few hours. This is exactly the project that the fund Grayscale called investment attractive. At the time of writing, the price has dropped to $0.54, and the market capitalization has fallen from $6 billion to less than $520 million. This has led to the liquidation of more than $84 million worth of traders’ positions, according to Coinglass data.
The fall of the OM token has already been compared to the collapse of Terra LUNA and the FTX exchange. What happened to the promising Mantra project?
The Mantra (OM) project was positioned as a leading platform for tokenizing real assets such as real estate, commodities, or art. The project has gained popularity due to its ambitious goals and partnerships with Dubai-based DAMAC Group, which signed a $1 billion real estate tokenization deal. Mantra has also received a virtual asset service provider (VASP) license from the Dubai regulator (VARA), which has added to its credibility.
The OM token has grown by 640% over the past 12 months, and the market capitalization has reached $6 billion, making Mantra the second largest RWA project after Chainlink.
In addition, the team announced the launch of a $108.8 million fund to support RWA and DeFi, and held an airdrop of 50 million OM tokens, which was valued at $316 million. All of this created an impression of stability and promise. What went wrong?
On April 13, the price of OM plummeted by 90% of its value in a matter of hours. Mantra co-founder John Patrick Mullin said that the collapse was caused by reckless forced liquidations on centralized exchanges (CEX). According to him, a large investor triggered cascading sell orders, which collapsed the order book and led to panic.
«We have determined that the OM market movements were triggered by reckless forced closures initiated by centralized exchanges on OM account holders. The timing and depth of the crash suggest that a very sudden closure of account positions was initiated without sufficient warning or notice. That this happened during low-liquidity hours on a Sunday evening UTC (early morning Asia time) points to a degree of negligence at best, or possibly intentional market positioning taken by centralized exchanges. Centralized exchange partners play an important role in providing liquidity to projects like ours. We work closely with them, however they continue to exercise enormously high levels of discretion. 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. To be clear, this dislocation was not caused by the team, the MANTRA Chain Association, its core advisors, or MANTRA’s investors selling tokens. Tokens remain locked and subject to the published vesting periods. OM’s tokenomics remain intact, as shared last week in our latest token report. Our token wallet addresses are online and visible», – he wrote on X.
He assured that MANTRA’s team, advisors, or investors have nothing to do with this. And the tokens remain locked and are still subject to the published holding periods
Binance confirmed that the drop was due to inter-exchange liquidations and noted that it had taken measures to mitigate risks, including reducing leverage for OM.
At the same time, analytical platforms such as Lookonchain and SpotOnChain reported that since April 7, 17 wallets have transferred 43.6 million OM (4.5% of the circulating supply, worth $227 million at the time) to exchanges, including OKX and Binance. Some of these addresses have been linked to Laser Digital, Mantra’s strategic investor. Critics have accused the project team of controlling 90% of the token supply and could have organized the sale before the crash.
The recent airdrop of 50 million OM tokens also caused controversy, as many wallets that were eligible to receive tokens were removed from the lists to receive them without explanation. This significantly increased the distrust of the team.