Allegations of insider trading cause Mantra's OM token to drop almost 90% on Sunday.
Alleged control by Mantra team of 90% of the token supply raises insider pump-and-dump questions.
The Mantra team denies claims of insider dumping and links the fall to careless liquidations.
Following a stunning fall from $6.33 on Sunday, OM price trades at $0.83.
Following a dramatic 90% drop from $6.33 on Monday, Mantra (OM) price stayed at $0.83 throughout the Asian session. With the downfall wiping away $5.2 billion in the market value of the token, similarities to the historic fall of Terra LUNA and FTX in 2022 were fast drawn. Among dubious token transfers, Mantra's crew has been charged of insider trading.
Price crash Mantra: Insider dumping or careless liquidations?
Built for institutions and developers, Mantra, the security-first real-world asset (RWA) layer 1 blockchain is in crosshairs after its native OM token drop of 90% on Sunday. Based on Coinglass data, the crisis set off $68.86 million in 24-hour liquidations; long holdings suffered most at $49.68 million while short positions lost $19.18 million.
Several members of the crypto community have asked concerns about the fall; some claim that the Mantra team controls 90% of the token supply and might have planned the sell-off.
A group of OM whales shifted 14.27 million OM, almost $91 million, to OKX three days before the collapse at an average price of $6.375, according a study by SpotOnChain, a website tracking crypto transactions. Furthermore, the same whales had bought on Binance in March 84.15 million OM, or around $564.7 million, on average price of $6.711.
SpotOnChain said that "they may have hedged the position elsewhere, and it's possible they contributed to the sharp drop," even if their remaining balance of 69.08 million OM plummeting to $62.2 million has worth.
Another wallet monitoring tool, Lookonchain, noted that at least 17 wallets shifted 43.6 million OM, valued about $227 million at the time, to exchanges. Comprising 4.5% of the Mantra token's supply, this huge transfer accounted for Two of the locations, per Arkham's tag, are directly connected to Strategic Investor in Mantra, Laser Digital.
In response to the claims, the Mantra team said the project is "fundamentally strong." The team also said that Sunday's disaster had nothing to do with the administration of the project and was caused by "reckless liquidations".
Mantra has what next?
Given the continuous trade conflict, it is unknown what would have caused the catastrophic fall wherein many traders and investors sank more into losses. The Mantra team has pledged an inquiry and will provide more specifics on what happened.
The fall might have started with a mix of elements thus far: possible structural flaws, including the team's claimed 90% control of supply, significant token transactions into exchanges, over-the-counter (OTC) sales, and aggressive liquidations.
Based on the Relative Strength Index (RSI), Mantra's OM token shows great overselling on the daily chart, indicating that bears are on control as bullish momentum declines on Monday. With a MACD staying around -0.3007, the Moving Average Convergence Divergence (MACD) confirms the declining trend.
Mantra's success depends on the following several days, hence traders might want to show patience. A team report might help to clarify the reasons for the sharp drop in OM price, thereby opening the path for a comeback. Still, given rising worries about market manipulation, it would be wise to anticipate many outcomes, including a continuous downslope.
