Mantra Crypto: What Happened?

Mantra is a popular layer-1 RWA blockchain that suffered a token crash due to a liquidity cascade in April 2025. Learn more about what happened to Mantra.

Mantra is a Layer‑1 blockchain focused on tokenizing real-world assets (RWAs), but suffered a major crash in April 2025.
$OM token plunged over 90% in a single day due to what the team claims were forced liquidations by centralized exchanges.
Mantra has faced criticism over tokenomics, airdrop fairness, and centralized control.
Post-crash, Mantra is implementing recovery measures including token burns, governance decentralization, and transparency improvements.

What is Mantra?

Mantra (also known as MANTRA Chain) is a layer‑1 blockchain purpose‑built to tokenize and trade Real‑World Assets (RWAs), such as real estate, commodities, art, bonds, and more, with a focus on regulatory compliance.

Mantra key features

Security‑first & regulatory‑compliant: Built on Cosmos SDK with Tendermint/CometBFT, Mantra integrates KYC/AML, Decentralized Identity (DID), and regulatory guardrails at its core, empowering a permissionless chain that supports permissioned, compliant application.
Modular RWA‑focused architecture: Developers can leverage specialized on‑chain modules like compliance, token service, guard, and assets modules.
Interoperability: With IBC (Inter‑Blockchain Communication), Mantra Chain can connect and transfer assets across broader Cosmos-based networks, mitigating fragmented RWA liquidity
On‑Chain Governance & Native Token ($OM): The $OM token serves as the native staking, gas, and governance asset, converted from its original ERC‑20 form via a Mirror Bucket process. Holders participate in protocol governance, security staking, and fee payments.

What happened to Mantra?

On April 13, 2025, the native token of the MANTRA Chain, $OM, experienced a catastrophic price collapse, plummeting from approximately $6.30 to under $0.50 within a single day. This rapid decline wiped out more than $6 billion in market capitalization, sending shockwaves through the crypto community.

The dramatic downturn sparked immediate speculation. Some observers feared it might be a coordinated insider sell-off or even a “rug pull.” However, investigations and wallet activity showed no evidence of wrongdoing by the MANTRA team or its early investors.

In response to the crisis, MANTRA's leadership attributed the crash to “reckless forced liquidations” carried out by centralized exchanges during a time of low market liquidity, specifically on a Sunday evening UTC, when trading volumes are typically thinner. According to the team, these algorithm-driven liquidations created a cascade effect that accelerated the token’s decline, despite no large-scale selling by core stakeholders.

The event raised serious concerns about the fragility of token ecosystems in the face of automated risk systems on exchanges and highlighted the need for more responsible liquidation mechanisms in the wider market.

Is Mantra a scam?

There is no definitive evidence that Mantra Chain (and its $OM token) was an outright scam, though the project has faced a lot of criticism since the fallout, including:

Airdrop fairness & insider ties: On-chain investigations revealed suspicious token flows between Mantra team wallets and addresses exhibiting Sybil-like activity, raising questions about whether insiders unfairly benefited from airdrop allocations.
Token supply manipulation: The total $OM supply was abruptly doubled from 1 billion to 2 billion, before massive token dumps, leading critics to accuse the project of supply dilution followed by insider selling.
Centralized control & skepticism: Critics on Reddit and similar platforms have argued $OM was controlled by a small core (“they control 90 % of the tokens”), engaged in forced bridging, made broken promises on unlocks, and had evidence of censorship or removed criticism.

The Mantra team, in particular the co-founder, has responded to most of these allegations, including:

Forced liquidations by exchanges: The Mantra team, including co-founder JP Mullin, blamed the 90 %+ price crash on “reckless forced liquidations” executed by CEXs during low-liquidity hours, not insider dumping. They pointed to automated margin call cascades, not malicious intent.
Locked team tokens: Mantra insists no core team or investor wallets sold significantly during the crash, and tokens in team-controlled addresses remain on vesting schedules.
Official exchange probes: Exchanges like Binance and OKX initiated investigations into cross-exchange liquidations, warning users they found unusual deposit-and-liquidate patterns, but did not conclusively label Mantra a scam.

Overall, while many view parts of the Mantra saga with suspicion, especially related to supply manipulation, insider behavior, and aggressive airdrop moves, no definitive proof has emerged that the project was an outright scam.

What’s clear is that its structure and execution were deeply flawed, involving centralized control, sudden supply changes, poor liquidity, and aggressive exchange trading dynamics. It’s not a clear-cut fraud, but it’s also far from a well-governed decentralized system. Investors should treat it as a cautionary example in tokenomics and project transparency.

What happens to Mantra now?

Despite the dramatic $OM token crash, the Mantra team has committed to continuing development and implementing several key changes aimed at restoring trust and strengthening the ecosystem, including:

Token supply reduction: 150 million $OM tokens from the team allocation were burned in April 2025. A second 150 million $OM burn is under consideration, potentially reducing the total supply by 300 million. These burns are intended to demonstrate the team’s long-term commitment and address concerns about oversupply.
Decentralization of governance: The validator set is being diversified. Internal validators will be reduced by 50%, and 50+ external validators will be onboarded by the end of Q2 2025. The goal is to minimize central control and increase credibility through a more decentralized, permissionless governance model.
Improved transparency: A real-time tokenomics dashboard has been launched, and the team has committed to ongoing transparency reports covering token flows, vesting, burns, and treasury allocations.
Ecosystem and developer growth: EVM testnet (“Omstead”) is live, providing a sandbox for building and testing smart contracts. At the same time, partnerships are being nurtured for real-world asset (RWA) tokenization projects, including asset providers, exchanges, and regulators.
Policy Advocacy: The team is actively pushing for industry reforms around how centralized exchanges handle forced liquidations, citing the role these played in the token collapse.

Don’t forget the tax bill…

If you have losses from the OM token crash, there’s a silver lining for your tax bill. You can offset these losses against your gains (once you’ve realized them by disposing of your tokens) in order to reduce your overall tax liability. Learn more in our crypto tax write offs guide.

Koinly can help you calculate your crypto taxes from start to finish, supporting more than 900 exchanges, wallets, and blockchains to make crypto tax simple. Try it free.