Movement Labs and Mantra Scandal Are Shaking up Crypto Market-Making
Movement Labs and Mantra Scandal Are Shaking up Crypto Market-Making
Forced liquidations, hidden contracts, and backchannel deals are prompting a rethink in how liquidity is structured — and who gets trusted.
- Crypto market-making faces scrutiny after scandals involving Movement Labs' MOVE and Mantra's OM tokens.
- Market makers are reevaluating token risk underwriting and demanding greater transparency.
- The secondary OTC market is distorting token supply dynamics and complicating price discovery.
Recent controversies surrounding Movement Labs' MOVE and Mantra's OM tokens have stirred up the crypto market-making sector, prompting a reevaluation of liquidity practices and trust within the industry.
The collapse of Mantra's OM token, plummeting over 90% in a short period without an apparent cause, alongside Movement Labs' MOVE scandal has raised concerns about hidden dealings and undisclosed agreements impacting market stability.
Unlike conventional financial markets where market makers ensure smooth trading on regulated platforms, crypto market makers are more akin to high-stakes traders. They engage in negotiations for token allocations before launch, agree to lockups, set up liquidity arrangements for centralized exchanges, and may even acquire equity stakes or advisory roles.
This unconventional approach blurs the lines between providing liquidity and engaging in private arrangements based on tokenomics and internal dynamics.
As the industry reels from these events, there is a growing demand for transparency and fair play. Market participants are becoming more vigilant about scrutinizing deal terms and assessing token risk more critically.
The shadowy world of secondary OTC markets adds another layer of complexity to the ecosystem. Here, tokens change hands surreptitiously well before public disclosure, distorting supply dynamics and complicating price discovery processes. This clandestine activity poses challenges for liquidity providers striving to maintain orderly markets amidst opaque dealings.
In this environment where appearances can be deceiving, traders face not just market volatility but also the uncertainty of accurately gauging token supply due to off-market transactions. As traditional notions of trust erode in this space, investors are advised to exercise caution when navigating the unpredictable waters of crypto finance.
Beneath the polished surface of token launch announcements and market-making agreements lies another layer of crypto finance — the secondary OTC market, where locked tokens quietly change hands well before vesting cliffs hit the public eye.
These under-the-table deals, often struck between early backers, funds, and syndicates, are now distorting supply dynamics and skewing price discovery, some traders say. And for market makers tasked with providing orderly liquidity, they’re becoming an increasingly opaque and dangerous variable.
“The entire supply and vesting schedule has become distorted because of these off-market deals, and for liquid funds, the real challenge is figuring out when supply is actually unlocking,” Jung added.
In a market where price is fiction and supply is negotiated in back rooms, the real risk isn’t volatility for traders — it is believing the float is what the whitepaper and founders say it is.
