Two of this year’s most tumultuous token debacles, the Movement Labs’ MOVE scandal and the nosedive of Mantra’s OM, are rocking the foundations of crypto market-making. In an industry where transparency is often as elusive as a golden unicorn, these events have peeled back the curtain on the murky, chaotic world of crypto trading.
Unraveling the Chaos
In late April, Mantra’s OM token plummeted over 90% within mere hours—without any apparent catalyst. This catastrophic tumble left market participants scrambling for answers, only to uncover a tangled web of hidden players, questionable token unlocks, and alleged under-the-table agreements. This is no ordinary market; it’s a labyrinth where market makers don’t just provide liquidity but engage in high-stakes negotiations, pre-launch allocations, and sometimes, even equity or advisory roles.
Movement Labs was thrust into the spotlight when a CoinDesk exposé revealed how some of its executives collaborated with their own market maker to offload $38 million worth of MOVE tokens in the open market. The fallout has been profound. Firms are now questioning their previous laissez-faire approach to trusting counterparties. As explored in The Protocol: Inside Movement’s Token-Dump Scandal, the intricate details of these transactions have raised significant concerns within the industry. How does one hedge when token unlock schedules are as clear as mud? What happens when informal deals silently trump DAO decisions?
“We’re now focusing on more thorough preliminary discussions and educational sessions with project teams,” explained Metalpha’s market-making arm in a CoinDesk interview. “Our structures have evolved to prioritize long-term alignment and incorporate safeguards against unethical behavior like excessive token dumping.”
Scrutiny and Skepticism
Behind the scenes, discussions are heating up. Deal terms are under intense scrutiny, with some liquidity desks reconsidering how they assess token risk. In this climate, prestigious reputations no longer hold sway. “Projects have learned that even established players can exploit shadow allocations,” remarked Max Sun, head of Metalpha’s Web3 ecosystem. “The era of presumptive trust has ended.”
The secondary OTC market — a place where locked tokens change hands well before public vesting — is adding to the complexity. These clandestine transactions are warping supply dynamics and skewing price discovery, posing a growing threat to the orderly provision of liquidity. For more insights into the repercussions of these practices, see Movement Labs Suspends Rushi Manche Amid Coinbase Delisting, Token-Dumping Scandal.
“The secondary OTC market has altered the industry’s dynamics,” said Min Jung, an analyst at Presto Research. “Tokens with suspicious price action, like $LAYER, $OM, and $MOVE, are often the most actively traded off-market. The real challenge lies in determining when supply is truly unlocking.”
Looking Ahead
As the crypto market grapples with these revelations, the risk of believing in the float as presented by whitepapers and founders is becoming increasingly apparent. Some market makers are demanding stricter transparency or are opting to walk away from projects shrouded in opacity. The narrative is shifting, and with it comes the potential for a more accountable and transparent market-making ecosystem.
The full implications of these scandals remain to be seen. Will they spark a wave of reform, or will the market continue to operate in its shadowy corners? As the industry navigates these choppy waters, one thing is clear: the old ways of doing business are no longer sufficient. The future of crypto market-making may hinge on how well it can adapt to this brave new world.
Source
This article is based on: Movement Labs and Mantra Scandal Are Shaking up Crypto Market-Making
Further Reading
Deepen your understanding with these related articles:
- CoinDesk Recap: Movement’s Very Bad Week
- Crypto token failures soar, with 1 in 4 launched since 2021 dying in Q1: CoinGecko
- Crypto Coalition Tells SEC Staking Is ‘Essential Good,’ Not a Security
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
