Key Takeaways:
- ZachXBT links REEF Finance founder Denko Mancheski and Fukogoryushu to OM’s 90% crash, citing large pre-collapse loans against OM tokens.
- Mantra CEO John Patrick Mullin offers to burn his 772,000 OM team allocation to address community backlash and stabilize prices.
- OM remains 88% below weekly highs despite recovery efforts, spotlighting risks of low liquidity and leveraged trading.
The OM Collapse: A Perfect Storm of Leverage and Alleged Insider Moves
The cryptocurrency market faced another shock this week as Mantra (OM) token plummeted 90% in hours, erasing $5.5 billion in value. Blockchain investigator ZachXBT began some controversy by linking the crash to REEF Finance founder Denko Mancheski and an associate known as Fukogoryushu. According to on-chain data, the duo reportedly sought massive loans against OM holdings days before the collapse, raising suspicions of coordinated dumping.
ZachXBT’s findings revived scrutiny of REEF’s history, including past allegations of market manipulation and a rumored $80 million OTC deal with Alameda Research in 2021. While Mantra’s team denies prior knowledge of Denko’s actions, the incident underscores how cross-protocol affiliations can amplify risks in decentralized ecosystems.
Mantra CEO’s Strategy: Burn Tokens or Burn Bridges?
Facing furious investors, Mantra CEO John Patrick Mullin posted on X (formerly Twitter) a radical proposal: burning his entire 772,000 OM team allocation—a symbolic gesture to restore faith. “The community and investors can decide if I have earned it back,” he declared, revealing his current stake represents less than 1% of OM’s circulating supply.
Critics questioned the move’s impact, given team tokens remain locked until 2027. Yet Mullin emphasized transparency, sharing screenshots of his OM staked on Fluxtra – a liquid staking protocol built on Mantra Chain. He also floated token buybacks and community-controlled vesting mechanisms, aiming to counter theories of insider sales or wallet breaches.
Market Mechanics: How Liquidity Crunch Fueled the Fall
The crash wasn’t just about alleged bad actors. Thin liquidity exacerbated OM’s freefall: market depth plummeted from 290M to under 500K, triggering $21 million in forced liquidations on OKX alone. Traders likened the event to Terra’s 2022 collapse, citing similar patterns of panic selling and exchange-driven margin calls.
Following up on investigations, Lookonchain – a blockchain analysis platform – found large investors’ wallets moving huge amounts of Mantra tokens to centralized exchanges like Binance and OKX.
They also found that two wallets linked to Mantra investors Laser Digital transferred 4.6M OM tokens to exchanges, and another one linked to Shane Shin, founding partner of Shorooq Partners – also a Mantra investor – that received 2M OM tokens on the crash day.
On the other hand, a Reddit user did due diligence on Mantra’s scheme, warning about possible exit liquidity and the real risks involved in the project 22 days before it got rugged!
What This Means for Crypto: Trust, Transparency, and Tokenomics
The OM saga highlights two existential challenges for crypto projects:
- Insider Influence: Founders’ cross-project ties can breed conflicts of interest, demanding stricter disclosure norms.
- Liquidity Risks: Low-volume tokens remain vulnerable to cascading sell-offs, urging exchanges to bolster safeguards.
Mullin’s token burn pledge sets a precedent, but its success hinges on execution. For investors, the takeaway is clear: vet not just a project’s tech, but its alliances and liquidity buffers.
Conclusion
The Mantra (OM) crash is not just a market glitch—it is an accountability crash test for all crypto. While ZachXBT’s allegations threw shade on REEF’s founders, Mullin’s transparency push could redefine leadership standards. However, OM’s price is currently still down about 88%. The path to recovery will demand more than burning a symbolic amount; it takes structural changes to prevent history from repeating. For now, the crypto world watches, waits, and learns.
