Mantra token crash: Who is to blame?

​Volatility in the cryptocurrency world is nothing new. However, what happened with the Mantra token left investors in shock. On Sunday, the OM price collapsed by 90% in just one hour. The question remains: Was this rapid decline caused by team errors, liquidity issues, or actions of centralized exchanges?

It all started on the evening of April 14, a time when many traders are typically inactive in the market. For Mantra, this moment proved to be catastrophic. The token, which had recently traded at $6, began to plummet rapidly. In just a couple of hours, Mantra fell to $0.37, resulting in a loss of 88% of its value in a single day.

What happened to Mantra?

Mantra is one of the leading projects in the cryptocurrency sector, specializing in tokenizing real-world assets (RWA). The project's goal is to digitize popular assets like gold or stocks and transfer their value to the blockchain. This sector aims to enhance transparency and liquidity for traditional assets through decentralized finance (DeFi).

But how did a top-25 cryptocurrency project end up in a situation where just a few liquidations wiped out $5 billion in market capitalization?

Let's go back a bit. On Sunday, at 21:06 UTC, the Mantra token was trading above $6. However, just two hours later, by 23:07, its price had dropped to only 52 cents. Notably, on some exchanges, the decline was even more severe, further worsening the situation. The crash happened so fast that even experienced traders couldn’t react in time.

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Many experts link such events to low liquidity in weekend markets. With fewer transactions and lower activity, large orders can have a significantly greater impact on prices than usual. These are precisely the moments when mass liquidations of positions can occur.

The role of centralized exchanges and position liquidations

As noted by the co-founder of the project, John Patrick Mullin, the sudden price drop of the Mantra token led to a series of forced liquidations. Traders who were using leverage to trade saw their positions being closed by centralized exchanges, which caused a massive sell-off of their assets and further intensified the price decline.

Mullin emphasized that this was not a case of a "rug pull" — where the project's team deceives investors and takes the money. He reassured that the team's assets remained secure and that they did not sell tokens during the price drop, as sometimes happens in such incidents.

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Despite Mullin's denials, some members of the crypto community suggested that the sharp drop could have been related to the actions of team members or their close associates. Among the suspicious transactions was the movement of 38 million OM to a Binance cold wallet. As Mullin explained, this was related to the completion of the staking program.

According to the project leader, all the team's tokens are now secure and have been locked according to the vesting schedule, with the sudden drop resulting from "reckless liquidations" and "market distortions."

The trading positions on the OM token were liquidated without prior notifications or margin calls, which points to errors in the exchange's operation. Mullin insists that the exchange’s careless actions triggered the liquidation chain.

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The initial drop of MANTRA triggered a series of forced position closures for traders who had bet on the token's rise and used leverage from the exchange. The closure of their trades led to a massive sell-off of crypto assets, further exacerbating the price decline.Forced liquidation occurs when a trader's margin position falls below the support level. This can trigger a chain of liquidations that sharply increases the price pressure, leading to a market crash.

Recovery and plans

The Mantra team is now focused on saving the token. Mullin stated that they are considering options for a buyback (token repurchase) and possibly burning a portion of the tokens. However, these measures are still in the planning stage.

Meanwhile, the team continues to work on rebuilding investor trust and has stated its intention to overcome the current difficulties. Importantly, all tokens remain locked, and the project continues its operations despite the crisis.

Conclusions

For Mantra, one of the leading projects in the real-world asset (RWA) tokenization sector, such a crash could have extremely negative consequences, undermining relationships with major partners, including Google Cloud and Dubai's DAMAC. These partnerships are crucial for the project's future development and success, but the token price drop and the fallout from the liquidations could weaken trust and raise doubts among strategic partners.

Kronos Research CEO Hank Hwang also pointed out that the Mantra incident demonstrated that the RWA sector is still in its early stages. According to him, the continued growth of this segment of the crypto market requires a stable and resilient infrastructure that meets the criteria of transparency, security, and regulatory compliance.

Given all these factors, Mantra's future depends on how the project team can restore trust not only among investors but also with key industry players. Time will tell how quickly they can adapt to the new conditions and overcome the current challenges.