MANTRA co-founder says forced liquidations triggered OM token's 90% crash

Key Takeaways

• OM token crashed 90% due to forced liquidations by centralized exchanges, said MANTRA's co-founder.
• MANTRA denies involvement from MANTRA team or investors in the price drop.

John Patrick Mullin, the co-founder and CEO of MANTRA, addressed the OM token’s abrupt 90% price decline on Sunday, stating that “reckless forced closures” on CEXs caused the drop, rather than alleged internal activity by the project team.

“The timing and depth of the crash suggest that a very sudden closure of account positions was initiated without sufficient warning or notice,” Mullin said in a statement to the community a few hours after the crash surfaced.

While not naming any specific platform, the entrepreneur argued that the issue was the possibly unchecked and “reckless” actions of the CEXs where OM was being traded.

“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,” he stated.

Mullin noted that these exchanges “continue to exercise enormously high levels of discretion,” and warned that when such powers are used without oversight, “dislocations like what recently happened can and will occur, hurting both projects and investors alike.”

The OM token, which peaked at $9 earlier this year, fell from $6.3 to as low as $0.37 on April 13. At the time of writing, the token has slightly recovered above $1.

MANTRA was accused of offloading their bag. However, Mullin denied those claims, stressing that “this dislocation was not caused by the team, the MANTRA Chain Association, its core advisors, or MANTRA’s investors.”

Mullin added that all team and investor tokens are still locked according to their publicly disclosed vesting schedules. He also claimed that the OM token’s fundamental tokenomics remain unchanged.

MANTRA, which recently became the first DeFi protocol licensed by Dubai’s Virtual Assets Regulatory Authority (VARA), plans to host a community discussion on X to address the recent incident.

The explanation didn’t ease concerns in the crypto community. Many still felt the statement lacked transparency. In a follow-up post, Mullin said that the team is working on compiling details of the situation.

Previously, several altcoins suffered sharp declines on Binance, including Act I: The AI Prophecy, which dropped 50%, DeXe, which fell 38%, and dForce, down 19%. The declines came after Binance revised margin requirements, which could increase liquidation risks for undercollateralized positions.