Comprehensive Review of the OM Token Crash Event
In the early hours of April 14, 2025, the OM token, which centers on the concept of RWA (real-world asset tokenization), plummeted from US$6.2 to US$0.4 within two hours, erasing a market cap of US$5.5 billion. The core trigger of this event can be traced back to March 20, when several large addresses transferred OM tokens to exchanges and executed low-price OTC trades, which sparked a panic sell-off.
On-chain data shows that within three days preceding the crash, 43.6 million OM tokens (accounting for 4.5% of the circulating supply) were deposited to exchanges such as OKX and Binance, including addresses related to strategic investor Laser Digital. Although the MANTRA team, the project team behind OM, denied the sell-off, they accused centralized exchanges (CEXs) of forcibly liquidating positions during periods of low liquidity in the Asian early morning, which led to a cascading price decline.
The Three Core Conflicts Behind the Event
Power Struggles among the Project Team, CEXs, and Market Makers
The circulating supply of OM tokens is only 88 million, yet the Fully Diluted Valuation (FDV) is as high as 730 times, indicating a severe imbalance between market cap and the total value locked (TVL) of the protocol. The project team created an illusion of scarcity by employing staking lock-ups (yielding 20% annual returns) and a deflationary burn mechanism to attract speculative funds and drive up the price, only for retail investors to eventually take over.
Meanwhile, CEXs act as both liquidity providers and potential conflict-of-interest parties. For example, Binance had already reduced the leverage on OM and warned about the risks in the tokenomics prior to the crash, yet did not prevent forced liquidations during periods of low liquidity, which has raised suspicions of exploiting regulatory loopholes to harvest retail investors.
The “Valuation Trap” of High FDV and Low Circulation
The FDV/TVL ratio of OM is as high as 730:1, far exceeding healthy industry levels (usually less than 50:1). Such an exorbitant valuation relies on expectations of token unlocks and ecological blueprints, yet the actual TVL is only US$4 million. The project team further compressed the actual circulating supply by modifying airdrop rules (reducing the unlocked percentage from 20% to 10%) and extending the lock-up period to three years, resulting in a “paper market cap” bubble. Just prior to the crash, the OM on-chain staking pool experienced a sudden token withdrawal of US$5.84 million, which coincided exactly with the timing of the crash, exposing suspicions of project team control.
Regulatory Vacuum and Gray Area of Market Manipulation
On-chain data shows that a mysterious whale address, 0x9a…1a28, withdrew US$40 million worth of OM tokens from Binance one month before the crash, then quickly sold US$20 million worth of tokens on the market. In addition, market makers were revealed to have offloaded tokens at low prices through OTC trades and then used leveraged contracts to harvest retail positions. Although the UAE Virtual Asset Regulatory Authority (VARA) has intervened in an investigation, the project team exploited its Middle Eastern compliance license to avoid issues with token distribution transparency, highlighting a lack of global regulatory cooperation.
Far-Reaching Impact on the Cryptocurrency Market
Trust Crisis in the RWA Sector
The OM event exposed a common problem in RWA projects: an overreliance on a compliant narrative without sufficient backing by real assets. Previously, OM claimed to have partnered with UAE real estate giant MAG to tokenize US$500 million of real estate, yet on-chain data only showed a TVL of a few million dollars. This event may trigger regulatory scrutiny of tokenized assets, particularly for compliant projects in the Middle East and Asia.
Failure of CEX Risk Control Mechanisms and Room for Improvement
During the OM crash, the liquidation volume of OM contracts on Binance and OKX reached US$66.97 million, with long positions accounting for 72% of the liquidations. Exchanges offering up to 100x leverage on low-circulation tokens have exacerbated market volatility. Although Binance’s founder CZ stressed that “investors should make their own decisions,” there are industry calls to introduce dynamic liquidation thresholds and limit high-leverage trading during inactive periods. For example, OKX has announced adjustments to its risk control parameters and warnings about changes in circulating supply.
Defensive Strategies for Retail Investors
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Beware of the FDV Myth:
Prioritize projects with a TVL/FDV ratio of less than 50 and verifiable protocol revenue, avoiding reliance on token unlock narratives. -
Avoid Low Liquidity Periods:
Markets during Asian early morning (UTC+8) are shallow; avoid maintaining high-leverage positions. -
Verify On-Chain Data:
Use tools like Arkham and Nansen to monitor abnormal movements in large-holder wallets; for example, watch for unusual withdrawals in the OM staking pool before a crash.
Future Outlook: Paths to Rebuilding Market Trust
The OM event reveals structural risks in the crypto market: flaws in tokenomics design, blurry boundaries of CEX power, and delayed regulation. For ordinary investors, a return to fundamental analysis is necessary—focus on protocol revenue and user growth rather than market cap bubbles. For trading platforms, there is a need to optimize risk control models, such as introducing liquidity stress tests and imposing leverage limits for low-circulation tokens.
If you wish to learn how to identify risks through on-chain data, refer to JuCoin’s on-chain analysis guide, or experience real-time monitoring tools via the JuCoin trading platform.
Neason Oliver
