Summary:
The crash of MOVE and OM tokens causes panic alarm in the crypto space.
- Insider trading, secret unlocks of tokens, and unseen OTC transactions
- Market makers require higher transparency and paperwork
- Secondary OTC markets misrepresent the sense of supply and price perceptions
- Change in the industry to become ethical in liquidity and governance
Failures Which Revealed The Dirty Business Of Crypto
Movement Labs’ MOVE and Mantra’s OM crashes were two unexpected events that shook the crypto universe. They were not merely price decreases, but they exposed underlying problems with token ecosystems.
MOVE fell as far as its insiders dumped several million dollars worth of tokens and colluded with a market maker to do the same, while OM fell more than 90 percent with no official cause. They shook investor confidence and brought up acute questions of how liquidity is managed in Web3.
Dark Secrets, Hidden Keys and Dark Deals
The financial loss was not the only damage — but also the reputational loss. The scandals revealed that it is not unusual to find certain market makers who do more than filling the market — by influencing tokenomics, making launch recommendations, and other darker activities that are more akin to insider trading.
Players in the market have come to appreciate the fact that handshake agreements and casual relations have created too much space to be bent.
Secondary OTC Markets: A Dangerous Mute Assailant
The major portion of the issue is presented by the unregulated over-the-counter (OTC) market. Tokens, still in many cases locked in vesting schedules, are being sold off in quiet large lots to early investors or to hedge funds.
This forms a hidden supply, which is neither apparent to the masses, nor even appearing in whitepapers.
Min Jung, analyst at Presto Research, stated that:
“Tokens with irregular trading such as: $MOVE and $OM are also the most vigorously traded in the secondary OTC market. The result? The liquidity cannot be foreseen by the market makers and the investors are left confused about the actual circulation supply.”
Trust is Dead — Long Live Transparency
To this end, the market-making firms are revolutionizing their operations. Other exchanges such as Hong Kong-based Metalpha now have stringent measures to guard against token dumping and wash trading.
Mr. Max Sun, the head of Web3 at Metalpha, comments:
“Reputation can no longer cut it in projects. Even well-established players have been found competent in shadow allocations. Gone are the times when there would be presumptive trust.”
The market makers are now questioning the hard questions:
- Who actually governs the supply of tokens?
- When do tokens open — and who can get early access?
- Will there be any secret back room deals that the population is unaware of?
The Way Ahead: Ethical Liquidity in the Trustless World
The MOVE and OM collapses are not isolated occurrences that we should sleep over. Due to the maturity of the crypto industry, the ethical, transparent, and well-governed liquidity practice is in demand.
Funny enough, in a system that was constructed around decentralized systems and trustless systems, it seems that human trust glues things together. And when that trust goes, it is a shock to the whole system.
Web3 needs to shape up, and scrub down.