Mantra’s OM Token Crashes 90% After Forced Liquidation Turmoil

Tags: mantra

Key Takeaways:

• Forced liquidations wiped out more than $5 billion in OM token market value in a matter of hours.
• Accusations of insider selling have circulated, but Mantra insists they were not involved in any such activity.
• As a result, investors are demanding greater transparency and improved risk management from centralized exchanges.

OM Token Crashes: Where Does The Fall End?

OM token crashed from $6 to $0.37 on April 14, wiping out $5.5 billion in market value in under 24 hours — one of the most dramatic collapses in crypto history. At the time of writing, OM is trading at $1.03 but is still down more than 87% from its all-time high of $8.99.

The event shocked investors and drew parallels to infamous blowups such as the 2022 collapse of Terra Luna. As social media platforms flooded with accusations and confusion, the lack of clear answers from the Mantra team only fueled further speculation.

Insider Dump or Liquidation Cascade?

The magnitude and velocity of the crash raised immediate suspicion of an insider sell-off. Some suspect insider dumping, citing $227M worth of OM moved to exchanges pre-crash, including wallets tied to Laser Digital. Mantra denied involvement, blaming cascading liquidations — $65M in OM contracts were wiped, $33M on Binance alone. A large OM transfer to OKX before the crash resulted in massive losses, likely magnified by leverage.

Blame the Market Maker Mistakes, Not the Exchange

Aside from the cascade of liquidation, reports emerged of errors in algorithmic trading. A market maker misread OM’s collapse, pushing BTCDOM up 20% under the false assumption of a broader structural shift. The incident showed how small tokens like OM can disrupt broader indexes via automated trading systems.

The volatility was a result of cross-platform liquidations, and Binance outlined risk control measures it has in place for OM, including building in reduced leverage and on-screen warnings. Since January 2025, Binance has categorized OM as a token with evolving tokenomics, with an increased supply, and remains under review.

Reactions: Anger, Fear and Calls for Accountability

Investors, blindsided by the sudden crash, reacted with anger. Many blamed the Mantra team for negligence, and worse. Mantra’s closed Telegram group was deleted amid all this commotion.

On-chain analyst ZachXBT criticized the team’s vague response, questioning how OM could lose over 90% of its value without any internal safeguards. Others mocked the phrase “reckless liquidations” as deflection, calling for concrete explanations and legal consequences.

Mantra’s Defense and Future Challenges

Dismissing any accusations of insider involvement, co-founder JP Mullin laid blame for the crash on improper forced liquidations at multiple exchanges. The team and core investors’ OM tokens are still locked, as governed by the published vesting schedule, he added.

https://twitter.com/jp_mullin888/status/1911559071263822020

CEX partners have a significant margin of discretion when it comes to dealing with liquidity, Mullin added, and bad execution during non-peak hours — particularly early morning Asia time — may have exacerbated the collapse. He also suggested negligence or manipulation on the part of exchange platforms, claiming that large positions were closed with insufficient warning, creating a domino effect.

Mullin then promised further communication in a subsequent social media session and also alluded to a forthcoming community town hall to answer questions directly.

What It Means for DeFi and Other Tokenized Assets

The OM crash is a grim reminder of the riskiness that comes with dealing with tokenized real world asset (RWA) projects, and hybridization with traditional finance structures. Unlike so many other companies in the crypto sector, MANTRA was a reputable project, with strong partnerships with Google Cloud and the DAMAC Group of Dubai, but its entire reputation now rides on how it gets through this crisis.

The episode also casts serious questions over risk management on centralized exchanges. High-leverage trading is a contentious feature of crypto platforms. In this case, it seems to have been the spark for a $5 billion market disaster.

In a leveraged market, margin calls can be devastating. For example, $58 million worth of OM contracts were liquidated in four hours.

Recent Paraphrasings for Mantra’s Next Steps Will Define Its Survival

Although the price of OM bounced back partially from $0.5 to $1.2 in the aftermath of the crash, investor confidence is hit hard. The project’s ability to recover might hinge on a number of factors:

• Clarity with its community and investors
• More collaboration with exchanges to mitigate liquidation spirals
• Legal opinion to assess viability and regulatory compliance
• Regular updates on token distribution and wallet activity

At present, OM is ranked #97 in terms of global crypto with a market cap of $777 million, still a way off its peak valuation. The fallout has rippled through the DeFi ecosystem — an ecosystem that still struggles to balance the need for innovation with the need to protect investors — despite assurances of underlying health.