More and more crypto projects are slumping uncontrollably, not because of hackers or carpet pulls, but because of dealing with market makers behind the scenes. Mantra (OM) is a recent victim and his story has warned the industry.
Market Maker: Savior or Silent Spoiler?
In traditional finance, market makers are entities that provide liquidity for exchanges, ensuring that there are always buyers and sellers of any assets.
But in cryptocurrencies – there is still a lack of space for clear standards and transparency, market makers can be the heels of Achilles for many early projects.
One of the most controversial mechanisms is the “loan options” model – in this case a project allows market makers to borrow a large number of tokens, as well as the right to buy these tokens at a fixed price in the future.
On paper, the model may sound fair. In fact, many people use it as a legal loophole to drain liquidity and the cost price of crashes, thus hurting customers claiming to help.
For example, DWF Labs faces numerous charges of aggressive dumping tokens received through loan options agreements. Although they deny the use of the “farm and dump” strategy, many projects follow the same pattern: the fast pump after the partnership, then lasting, lasting.
Source: Coingecko
Another well-known market maker, Gotbit, also faced criticism for launching Wash trading activities and supporting manipulation token releases. Several smaller projects working with Gotbit said their tokens were pulled out and dumped without continuing support after feeling “abandoned.”
Spell (OM): Not a carpet, but a collapse due to a loan contract
On April 13, Mantra’s OM token suddenly fell from above $6 to below $0.45, down 92% in just one hour. At first, rumors of panic carrying carpet pulls caught the community, but insider details quickly surfaced, revealing a deeper story.
The spell team said the crash began with a forced liquidation wave when the market was thin. Several wallets used as collateral were liquidated, releasing huge sales pressure and triggering a domino effect. But that’s just part of the problem.
Sources later revealed that the mantra had previously signed a loan option agreement with market makers.
The deal allowed market makers to buy a large portion of OMs – for example, 1 million tokens, fixed prices, $1 each. On the day of collapse, the transaction matured and the market makers immediately abandoned the token and ignored the price drop.
This move caused a final blow, causing further decline in OM prices, liquidity disappears, and leaving retail investors helpless. While the process may be contractually legal, it seriously undermines the community’s trust in the project.
Learn more: Initia Price Forecast
The incident quickly caught the attention of Zachxbt, a well-known chain investigator, who accused two of them of alleged involvement:
- Denko Mancheski, founder of Reef Finance
- Wallet alias Fukugo Ryōshu.
Both face charges of borrowing large amounts of charges using OM as collateral before the dumping yard occurs.
Meanwhile, major investors like Laser Digital and Shorooq partners denied their involvement and said they did not conduct OM-related transactions during this period.
Mantra CEO John Mullin launched a burn program that promises to destroy team tokens to restore token learning.
OM Price – Source: binance
Since then, the price of OM has recovered to around $0.80, but is still nearly 90% below its forward collision peak. Nevertheless, the community continues to exercise caution, especially considering the overnight losses of many retail investors.
Read more: Spell catastrophic collapse: In the collapsed collapse, $5.5 billion disappeared.
“Loan Choice” Model: Is trading too risky?
First, the loan option model seems ideal – no upfront fee and quick exchange list for market makers. But captured in it. Profit-driven dumps can damage communities when market makers support prices or long-term payments without restrictions.
Worse, many market makers fake demand through WASH trading, manipulating prices more than just providing liquidity.
“If you choose the loan option, you basically give the market maker a red button to authenticate your token at the end of the contract,” Onchain Bureau engineers said in a London group. “With the retainer (monthly payment), you at least maintain control.”
The case of the spell is not an isolated incident. More market makers use legal gaps and internal information to leverage loan options to dump the token and exit quietly.
Worse, most projects hide these terms, leaving retail investors invisible tokens.
in conclusion
The spell case warns how secret market maker transactions quietly erode the integrity of the project. The loan option model provides fast liquidity but enables startups that experience long-term, potentially catastrophic risks.
Crypto projects must prioritize transparency, consistent incentives and risk management rather than short-term hype. Otherwise, the silent killer lurks in the legally exquisite prints will continue to claim victims, one token at a time.
Read more: $om token historical crash
