This is even more cruel than LUNA. MANTRA token OM crashes 90%

In the early hours of this morning Beijing time, a sudden plunge kept many crypto investors awake all night.

In the early hours of this morning Beijing time, a sudden plunge kept many crypto investors awake all night. MANTRA token OM fell by about 10% in just one hour, and then plummeted directly from $5.21 to $0.50, a drop of 90%. There was an uproar, and the community commented: "There are still a lot of people saving OM to earn interest, and they don't even have time to run away. This is more fatal than the LUNA flash crash that year."

This sudden plunge is not just a technical issue, it’s more like a mine that has been buried for years finally exploding.

A lot of "dark history"? Uncovering MANTRA's controversial past

In the Web3 world, it is not uncommon for project valuations to deviate from fundamentals, but when a DeFi protocol has a TVL of only $4 million but a fully diluted valuation (FDV) of up to $9.5 billion, it is hard not to raise market doubts about its rationality.

MANTRA's collapse may not be without reason. In recent years, it has been full of controversies and disgraceful pasts:

The project owner has a high degree of control. Crypto analyst Mosi said that MANTRA controls most of the $OM circulation. The project owner has concentrated up to 90% of the $OM (792 million) in a single wallet address.

An infinite token relay game. Crypto KOL Rui pointed out that the underlying logic of OM is more like a carefully packaged OTC funding game. It is said that in the past two years, OM has raised more than US$500 million through OTC sales in a ground-based model. Its operation method is to continuously issue new OTC tokens to take over the selling pressure of the previous round of investors, forming a cycle of "new for old, old for new". Once liquidity is exhausted or the unlocked tokens can no longer be absorbed by the market, the entire system may collapse.

The project team itself will also "cash out in time" in each round of increases, and obtain additional profits by opening contracts and cooperating with the market.

Middle Eastern capital acquires project shell. According to Ye Su, in 2023, OM's FDV fell to less than 20 million US dollars, and the project was almost abandoned. Subsequently, with the help of a middleman, a Middle Eastern capital acquired the OM project, retaining only the original CEO and replacing all the rest of the team. This Middle Eastern capital has extremely rich luxury homes, resorts and various RWA assets, packaging OM as an RWAfi concept project. With the popularity of the RWA theme and high control techniques, OM achieved a 200-fold increase in 2024.

Involved in legal disputes and accused of asset misappropriation. According to the South China Morning Post, the Hong Kong High Court once asked six members of MANTRA DAO to disclose relevant financial information because the project party was accused of misappropriating DAO assets.

A large amount of promised fees and tokens are in arrears. Crypto KOL Phyrex said that he participated in the project investment in the early years, but never received the promised tokens. Even though he won the lawsuit in 2023, the MANTRA team never executed the court's decision, citing that it had "moved from Hong Kong to the United States." He complained: "Not a penny of the money and tokens owed has been paid."

The airdrop operation has been criticized. According to IceFrog, the MANTRA project has frequently modified the rules since the early airdrop activities, gradually postponed the token unlocking schedule, and ultimately caused users' expectations for airdrops to be repeatedly dashed. During the airdrop distribution stage, the project lacked transparency, always took a cold approach to community doubts, and even resorted to a "witch trial"-style withdrawal mechanism, depriving users of airdrop qualifications on the grounds of so-called "Sybil attacks", but never disclosed specific judgment criteria or data.

The truth behind the collapse: forced liquidation and the exodus of large investors

After the OM price plummeted, which quickly caused panic and doubts in the community, the MANTRA team spoke out urgently within a few hours, trying to clarify that the project had no direct relationship with the sharp market fluctuations. There are many analyses and speculations about this crash in the market. The causes can be roughly attributed to the following two points:

Forced liquidation triggers market volatility

According to MANTRA co-founder JP Mullin, the wild volatility in the OM market was caused by the reckless forced liquidation of OM account holders by centralized exchanges. He pointed out that the liquidation of these account positions happened very suddenly and without sufficient warning or notification in advance.

Data shows that in the past 12 hours, the OM collapse has led to more than $66.97 million in forced liquidations, with 10