Mantra (OM) and Movement Labs (MOVE) Token Scandals Are Shaking up Crypto Market-Making

Two of the 12 months’s most chaotic token blowups — Movement Labs’ MOVE scandal and the collapse of Mantra’s OM — are sending shockwaves via crypto’s market-making companies.

In each instances, speedy worth crashes revealed hidden actors, questionable token unlocks, and alleged aspect agreements that blinded market contributors, with OM falling greater than 90% inside hours late April on no obvious catalyst.

Unlike conventional finance, the place market makers present orderly bid-ask spreads on regulated venues, crypto market makers usually function extra like high-stakes buying and selling desks.

They’re not simply quoting costs; they’re negotiating pre-launch token allocations, accepting lockups, structuring liquidity for centralized exchanges, and typically taking fairness or advisory stakes.

The result’s a murky area the place liquidity provision is entangled with personal offers, tokenomics, and usually, insider politics.

A CoinDesk exposé in late April confirmed how some Movement Labs executives colluded with their very own market maker to dump $38 million value of MOVE within the open market.

Now, some companies are questioning whether or not they’ve been too informal in trusting counterparties. How do you hedge a place when token unlock schedules are opaque? What occurs when handshake offers quietly override DAO proposals?

“Our approach now includes more extensive preliminary discussions and educational sessions with project teams to ensure they thoroughly understand market-making mechanics,” Hong Kong-based Metalpha’s market-making division advised CoinDesk in an interview.

“Our deal constructions have developed to emphasise long-term strategic alignment over short-term efficiency metrics, incorporating particular safeguards in opposition to unethical habits akin to extreme token dumping and synthetic buying and selling quantity,” it said.

Behind the scenes, conversations are intensifying. Deal terms are being scrutinized more carefully. Some liquidity desks are reevaluating how they underwrite token risk.

Others are demanding stricter transparency — or walking away from murky projects altogether.

“Projects no longer accept prestigious reputations at face value, having witnessed how even established players can exploit shadow allocations or engage in detrimental token selling practices,” Metalpha’s head of Web3 ecosystem Max Sun noted. “The era of presumptive trust has concluded,” he claimed.

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 secondary OTC market has changed the dynamics of the industry,” said Min Jung, analyst at Presto Research, which runs a market-making unit. “If you look at tokens with suspicious price action — like $LAYER, $OM, $MOVE, and others — they’re often the ones most actively traded on the secondary OTC market.”

“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.

Read more: Movement Labs Secretly Promised Advisers Millions in Tokens, Leaked Documents Show