The MOVE and Mantra \u201cincidents\u201d exposed the extent of behind-the-scenes maneuvering that undermines not only diligent market-makers but also retail investors.<\/p>\n
Hidden contracts, unknown offshore entities, backchannel deals, shadow decision-makers, and coordinated insider extraction\u200a\u2014\u200athese are shady practices one might expect, and perhaps grudgingly accept, in the world of anonymous memecoins. But not in supposedly \u201cserious\u201d tokens.<\/p>\n
And yet, these events might ultimately serve a greater purpose\u200a\u2014\u200aa blessing in disguise, if you\u00a0will.<\/p>\n
The shockwaves triggered by MOVE and Mantra appear to have catalyzed a paradigm shift within the market-making space.<\/p>\n
Yes, market makers often have a high risk appetite\u200a\u2014\u200abut they\u2019re not suicidal.<\/p>\n
Project teams were never supposed to be the biggest counterparty risk. They were meant to be partners\u200a\u2014\u200atrusted collaborators working toward a shared\u00a0goal.<\/p>\n
Market makers certainly didn\u2019t envision themselves as the exit liquidity.<\/p>\n
\u201cTrust is no longer assumed\u201d between market makers and project teams\u200a\u2014\u200ait will now be engineered<\/em>, to borrow the words of Zahreddine Touag, Head of Trading at Woorton, in an interview with CoinDesk.<\/p>\n Many market makers now state they will conduct \u201cinstitutional-grade\u201d due diligence before partnering with any new project\u200a\u2014\u200aeven those hailed as the next blue chip, as MOVE once was. In fact, especially in such\u00a0cases.<\/p>\n Dive into our articles to understand how those recent scandals are reshaping trust in crypto market-making.<\/p>\n Crypto market maker are in may ways the backbone of the crypto industry, even more so than classic market makers are in traditional finance.<\/p>\n In traditional finance, the role of market makers is clearly defined. Whether individuals or firms, market makers operate on regulated exchanges like the NYSE or NASDAQ and continuously buy and sell during trading hours. More precisely, they quote buying prices\u200a\u2014\u200acalled the \u201cbid\u201d\u200a\u2014\u200aand selling prices\u200a\u2014\u200acalled the \u201cask\u201d\u200a\u2014\u200afor securities.<\/p>\n Market Maker in TradFi\u200a\u2014\u200aSource:\u00a0B2Broker<\/p>\n By continuously providing liquidity and transacting at equilibrium prices with a narrow gap between the bid and ask, market makers help prevent extreme price swings, ensure market depth, and operate under strict transparency and fairness rules, under heavy regulatory oversight.<\/p>\n They bank in by \u201ccapturing\u201d the bid-ask spread. The bid is the highest price a market maker is willing to pay for a stock, while the ask is the lowest price they are willing to accept to sell\u00a0it.<\/p>\n For example, a market maker might quote a bid of $150\u200a\u2014\u200ameaning they will buy shares at that price\u200a\u2014\u200aand an ask of $151\u200a\u2014\u200ameaning they will sell shares at that price. They profit from the $1 difference between the buying and selling price, known as the\u00a0spread.<\/p>\n Although crypto market makers, like traditional market makers, also maintain market liquidity and price stability, they often play a more organic and integrated role within the crypto ecosystem.<\/em><\/strong><\/p>\n As we just mentioned, crypto market makers, like their traditional counterparts, play a foundational role in maintaining liquidity and facilitating price discovery across the crypto ecosystem\u200a\u2014\u200afrom supporting token creators and exchanges to enabling smoother trading experiences for retail\u00a0users.<\/p>\n According to Flexe data, a crypto trader can gain approximately 93.33% in trading cost efficiency when a market has multiple active market makers, reducing spreads to around 0.01%, compared to less popular markets with limited market-making activity, where spreads may reach 0.1% to\u00a00.2%.<\/p>\n Source: Flexe.io<\/p>\n But crypto market makers often face greater risks than their traditional counterparts due to extreme market volatility, regulatory uncertainty, technical challenges, and\u200a\u2014\u200amore importantly\u200a\u2014\u200athe various and riskier responsibilities they take\u00a0on.<\/p>\n They are notably involved in early-stage token projects.<\/em><\/strong><\/p>\n New tokens are in dire\u200a\u2014\u200ain fact, vital\u200a\u2014\u200aneed of market-making liquidity at launch. When a new crypto token appears on an exchange, natural market liquidity is often very low or almost zero if there are few buyers and sellers at the\u00a0start.<\/p>\n Even if it has some natural liquidity, it can quickly develop wide price gaps. Large spreads can deter investors, while the token battles high volatility and price jumps, making it appear more like a wonky, trashy token than the blue-chip reputation it tries to establish at\u00a0launch.<\/p>\n They form a mutually beneficial agreement that usually includes:<\/p>\n Pre-launch token allocations\u200a\u2014\u200aBefore a token is publicly available, market makers sometimes negotiate directly with project teams to acquire large blocks of tokens at discounted rates or as part of strategic partnerships.Accepting lockups\u200a\u2014\u200aMarket makers often agree to \u201clock\u201d or hold these tokens for a set period to avoid flooding the market and crashing prices. This means they commit capital upfront without immediate liquidity.Structuring liquidity for centralized exchanges\u200a\u2014\u200aThey don\u2019t just provide buy\/sell quotes; they help design how much liquidity, token supply and buy\/sell orders, will be on exchanges when the token launches, influencing how smoothly trading\u00a0starts.Taking equity or advisory stakes\u200a\u2014\u200aSometimes, market makers receive not only tokens but also shares in the company or advisory roles. This ties them directly to the project\u2019s success or failure beyond just trading\u00a0profits.<\/p>\n Most memecoins launch on Pump.fun aside, market makers are the lifeline of the crypto\u00a0market.<\/p>\n They provide a significant portion of the trading volume for major cryptocurrencies, including Bitcoin and ETH\u200a\u2014\u200aestimates suggest this can be as high as 60 to 70% across the broader crypto market, though exact figures vary by exchange and\u00a0asset.<\/em><\/p>\n With such a strategic stake in the crypto market, market makers can, by design, find themselves sliding down the slippery slope of market manipulation, and the profession as a whole trails behind it with many whispers of being puppet masters who rig the crypto market and use retail traders as exit liquidity.<\/p>\n But as the MOVE and Mantra scandals also proved, market makers who apparently play by the book can find themselves on the other end of the puppet strings\u200a\u2014\u200acontrolled by those they are dealing\u00a0with.<\/p>\n Although the events that triggered their monumental meltdowns differed, the MOVE and Mantra scandals had a similar impact\u200a\u2014\u200ashattering the implied trust within the market-making industry.<\/p>\n Founded in 2022 by Rushi Manche and Cooper Scanlon, Movement is a Layer 2 blockchain built to scale Ethereum using Facebook\u2019s Move programming language.<\/p>\n It was one of the most anticipated token launches in recent years. Before its debut, Movement Labs had raised $3.4 million in pre\u2011seed and then $38 million in a Series A round led by Polychain in April 2024, with support from Binance Labs, OKX Ventures, and\u00a0more.<\/p>\n In early 2025, it was reportedly closing in on a $100 million Series B that could have valued the company at around $3\u00a0billion.<\/p>\n Based on its reputation and industry backing, market makers and investors expected a trusted partner\u200a\u2014\u200aone that wouldn\u2019t jeopardize its ambitions en route to unicorn status and would operate with impeccable rigor.<\/p>\n Oh well, they were in for a\u00a0ride.<\/p>\n The truth only began to emerge months after launch. In mid-March 2025, Binance banned a Movement Labs\u2013contracted market maker, froze its $38 million in profits, and informed Movement\u2019s team. Then on May 1, 2025, Coinbase announced it would suspend and ultimately delist MOVE, citing non\u2011compliance amid an ongoing investigation\u200a\u2014\u200aall actions tied to token\u2011dump revelations.<\/p>\n But it was Coindesk thorough investigation that publicly revealed the shocking dealings that had happened behind closed\u00a0doors.<\/p>\n On December 9th, 2024, MOVE burst onto the scene with palpable enthusiasm and effervescence: trading volumes reached nearly $450 million in the first 90 minutes, while on-chain activity surged dramatically within the first 24 hours\u200a\u2014\u200aSantiment later reported an astonishing $6.34 billion in transaction volume, signaling both retail speculation and intense airdrop farming\u00a0interest<\/p>\n The very next day, 66 million tokens, ~5% supply, around half of the circulating tokens, were aggressively sold, raising $38 million and crashing the token from over $1 to lows near\u00a0$0.22.<\/p>\n The entity behind the crash? A certain \u201cRentech.\u201d<\/p>\n Coindesk rewinded back the course of the event, and this is what allegedly happened.<\/p>\n It\u2019s quite the entangled, headache-inducing story that begins and ends with Rentech\u200a\u2014\u200aand involves at least two key players within Movement: its co-founder Rushi Manche and Sam Thapaliya, an extremely involved \u201cinformal adviser.\u201d<\/p>\n On November 27th, 2024, just two weeks before the token launch, Rushi Manche suddenly sent a new market-making contract<\/a> to the Movement Foundation, which oversees the token, for signature.<\/p>\n The clauses in the contract were peculiar, to say the\u00a0least.<\/em><\/strong><\/p>\n Rentech, an unknown-to-the-battalion, zero-credential market maker, was asking\u00a0for:<\/p>\n the loan of 5% of the MOVE token allocation, which would represent half of the publicly circulating tokens at launch!!!the ability to liquidate its MOVE tokens if the fully diluted value exceeded $5 billion\u200a\u2014\u200aprofits from which would be split evenly with the Movement Foundation.<\/p>\n Not only would this agreement hand over control of MOVE\u2019s market to a single, popped-out-of-nowhere entity, but it was also blatantly inviting market manipulation by creating the fake liquidity depth necessary for the MOVE price to cross the $5 billion threshold.<\/p>\n Suspicious doesn\u2019t even begin to cover\u00a0it.<\/p>\n Unsurprisingly, YK Pek, the Movement Foundation lawyer, and Marc Piano, director of the foundation, gave a fierce, brutal, and mocking rebuttal to the agreement. YK Pek called it \u201cpossibly the worst agreement I have ever seen [\u2026]\u201d while asking, \u201cWhat is even the rationale behind\u00a0this?\u201d<\/p>\n \u201cMovement Foundation general counsel YK Pek and director Marc Piano react to Rentech agreement(Obtained by CoinDesk)\u201d\u200a\u2014\u200aSource:\u00a0Coindesk<\/a><\/p>\n Rentech would not be deterred. They allegedly successfully passed themselves off as a subsidiary of Web3Port, a well-known Chinese market maker, when in fact they were an independent shell company inserted\u00a0midway.<\/p>\n While busy convincing Movement Foundation on one side, they were simultaneously dealing with Web3Port on the\u00a0other.<\/p>\n Two days before sending the proposed agreement to Movement\u200a\u2014\u200aon November 25th\u200a\u2014\u200aRentech struck a deal with Web3Port, acting, listen carefully, as a representative of Movement!<\/p>\n So when Rentech proposed the deal, Movement Foundation officials didn\u2019t even know they had already contracted with Web3Port<\/a> under substantially the same contract terms proposed on November 27th and rejected, all without their knowledge.<\/p>\n To this day, how and why Rentech was able to act as a representative of Movement remains unknown, or if it was even\u00a0lawful.<\/p>\n We only barely learned of the existence of this previous contract through the Coindesk investigation.<\/p>\n Source: Coindesk\u200a<\/a>\u2014\u200a\u201cNov. 25, 2024: Rentech signs a market-making agreement with Web3Port (name blurred). Rentech is the lender and Web3Port is the borrower. Rentech is also called \u201cMovement.\u201d Some elements were redacted prior to CoinDesk\u2019s receipt. CoinDesk modified the documents to withhold individuals\u2019 names to protect their privacy. Some names were already redacted. (Obtained by CoinDesk)\u201d<\/p>\n Rentech, posing as a respectable Web3Port subsidiary, pushed the agreement to Movement by proposing to front $60 million of its own collateral.<\/p>\n Allegedly, Rentech was heavily aided in its quest to conquer Movement by two insiders: Movement co-founder Manche, who first put the agreement on the table, and Sam Thapaliya, presented as an advisor to Movement and Manche. However, the extent of his involvement earned him the label of a \u201cshadow third co-founder\u201d of Movement among employees. Notably, Thapaliya was entrusted by Cooper Scanlon, Movement\u2019s other co-founder, to help curate MOVE\u2019s airdrop whitelist within the community.<\/p>\n The issue? Rentech was founded by Galen Law-Kun, Thapaliya\u2019s business\u00a0partner.<\/p>\n Ten days after initially rejecting the first agreement, on December 8th\u200a\u2014\u200aone day before the token launch\u200a\u2014\u200aMovement entered into a market-making contract with Rentech\/Web3Port.<\/p>\n This time, Web3Port\u200a\u2014\u200anot Rentech\u200a\u2014\u200awas listed as the borrower. However, the contract was signed by a Rentech director whose email was linked to a domain, web3portrentech.io, registered the very same day the contract was\u00a0signed.<\/p>\n The market-making contract terms remained generally the same, minus the abusive clause that gave Web3Port the power to sue the Movement Foundation if their token failed to be listed on a certain crypto exchange.<\/p>\n Meanwhile, Web3Port was allowed to borrow 5% of MOVE but under a changed payout structure.<\/p>\n There was no public or private disclosure of the agreement\u200a\u2014\u200aeveryone except the main architects of this debacle was left in the dark, despite the fact that it was so monumental and structural it brought massive risk to the project, its investors, and its community.<\/p>\n The Movement token debacle was allegedly the direct product of secret agreements, two-faced eminence grises<\/em>, and an unwise or ill-intentioned co-founder who brought the next blue chip to its knees in\u00a0minutes.<\/p>\n The Mantra scandal is another significant event in the crypto market that exposed vulnerabilities in token governance, market-making practices, and transparency.<\/p>\n Mantra is a DeFi project that launched its native token, OM. Initially, the token was well-received by the community and investors, gaining traction as part of Mantra\u2019s broader ecosystem. On February 27th, 2025, OM reached a new all-time high (~$8.20). It also hit key milestones, such as being officially listed on Bybit and launching its mainnet\u200a\u2014\u200amarking its entry into the RWA (Real World Assets)\u00a0space.<\/p>\n But the first cracks started to appear when, on March 14th, 2025, Mantra unexpectedly slashed a massive number of wallets from eligibility for its upcoming airdrop\u200a\u2014\u200adown to 217,351 eligible wallets from a much larger pool\u200a\u2014\u200atriggering accusations of insider manipulation.<\/p>\n This was followed on March 18th by a second purge, which removed another 123,195 wallets, further fueling outrage over the airdrop\u2019s fairness.<\/p>\n Things then took a dramatic turn in mid-April 2025, when the price of OM suddenly plummeted by over 90% within just a few hours on April 13th, wiping out massive value for investors.<\/p>\n The Mantra team, led by CEO John Patrick Mullin, has consistently denied any involvement in the\u00a0crash.<\/p>\n They attributed the sudden price drop to \u201creckless forced closures\u201d initiated by centralized exchanges (CEXs) against OM account holders. Mullin emphasized that these actions were taken without sufficient warning\u200a\u2014\u200aespecially during low-liquidity hours\u200a\u2014\u200asuggesting negligence, or possibly even intentional market positioning by the exchanges.<\/p>\n Source: Mullin\u2019s\u00a0Twitter<\/a><\/p>\n Despite the accusations, the actions taken by centralized exchanges seem to have been routine position liquidations in response to the ongoing crash\u200a\u2014\u200aaccelerating its pace mechanically, but not deliberately.<\/p>\n No, the core of the scandal lies elsewhere.<\/p>\n It involved hidden agreements and opaque token unlock schedules that were not clearly disclosed to the public or market participants. Market makers and early insiders had access to large amounts of OM tokens, which were supposedly locked or subject to vesting schedules.<\/p>\n However, behind the scenes, some of these tokens were allegedly unlocked or sold off unexpectedly, flooding the market with supply and causing the price to crash\u00a0rapidly.<\/p>\n Investigations revealed that certain early investors and insiders engaged in what appeared to be coordinated dumping of tokens, taking advantage of their privileged positions and confidential arrangements.<\/p>\n Blockchain analytics platforms like Lookonchain and Arkham Intelligence reported that at least 17 wallets moved a combined 43.6 million OM tokens\u200a\u2014\u200aworth approximately $227 million at the time\u200a\u2014\u200aonto exchanges before the crash. Notably, two of these wallets were linked to Laser Digital, a strategic investor in Mantra. However, Laser Digital denied ownership of these wallets, labeling the information as \u201cmislabeled.\u201d<\/p>\n Further complicating the situation, a wallet associated with Shane Shin, a founding partner of Shorooq Partners, received 2 million OM tokens just hours before the crash. Shin denied any involvement in the sell-off, stating it was merely a wallet-to-wallet transfer.<\/p>\n According to crypto sleuth ZachXBT<\/a>, Denko, REEF Finance founder, and Fukogoryushu were either aware of or actively involved in coordinating the price crash, as they had allegedly reached out to a number of people asking for massive loans against their OM in the days leading up to the -90%\u00a0crash.<\/p>\n For ZachXBT, it\u2019s a very plausible theory, as REEF Finance had experienced the same type of market manipulation before delisting.<\/p>\n Source: ZachXBT\u2019s Twitter<\/a><\/p>\n Apparently, the OM market was quite easy to manipulate, as it lacked liquidity depth. One trader reportedly initiated a $1 million short position on Binance, leading to rapid slippage and triggering a cascade of liquidations across multiple exchanges.<\/p>\n It\u2019s hard to believe, given those circumstances and the evidence, that the Mantra crash could be anything beyond a coordinated insider extraction. What we don\u2019t know\u200a\u2014\u200acompared to the MOVE meltdown\u200a\u2014\u200ais the true scope of both the manipulation and the actors involved. What shady deals between whom streamline this story? Market makers? Mantra team members? All of them together?<\/p>\n The impact on Mantra\u2019s price and reputation has been long-lasting; three months after its freefall, it remains in bloody\u00a0tatters.<\/p>\n Mantra (OM) Price\u200a\u2014\u200aSource: Coin Market\u00a0Cap<\/a><\/p>\n But those long-lasting effects are also impacting the broader crypto community.<\/p>\n These back-to-back traumatic market events\u200a\u2014\u200aeach involving what many saw as strong, sturdy, and serious cryptocurrencies that behaved as haphazardly and shadily as the most obscure memecoins\u200a\u2014\u200ahave made everyone take a step back, especially market makers, who are first in line not only for profits but also\u00a0risks.<\/p>\n After those two wake-up calls of epic proportion, informal, presumptive trust was definitely buried for market\u00a0makers.<\/p>\n Although those latent risks were to a certain degree acknowledged by market makers, those two cases showed how pervasive they were, and how much damage they could\u00a0inflict.<\/p>\n They used to go into agreement almost blind. Now they are reevaluating their risk model, and counterparty risk evaluation.<\/p>\n With the reevaluation of risk, comes the reevaluation of the standards they are now expecting in terms of transparency and scrutinization from token creator teams, with the rise of institutional-grade rigor expected from them to disclose seed, vesting and side-deal disclosures.<\/p>\n They are imposing much-needed structure on a largely unregulated\u200a\u2014\u200aand therefore frequently exploited\u200a\u2014\u200asegment of the crypto ecosystem.<\/p>\n Beyond new risk matrices and transparency demands, market makers are going a notch further by requiring robust contract architecture. According to Dean Sovolos, Chief Legal Officer at B2C2 for Coindesk<\/a>, this includes \u201cenhanced legal diligence, enforceable tokenomics terms, and clear contingency frameworks for breaches or deviations from disclosed unlock schedules.\u201d<\/p>\n In short, agreements are becoming significantly more binding, backed by TradFi-level expectations and on-chain enforcement\u200a\u2014\u200aeven when counterparties carry prestigious reputations.<\/p>\n In the case of market maker Metalpha, they\u2019re going a step further, as shared in a CoinDesk interview<\/a>, by emphasizing \u201clong-term strategic alignment over short-term performance metrics,\u201d while, like other market makers, \u201cincorporating specific safeguards against unethical behavior such as excessive token dumping and artificial trading\u00a0volume.\u201d<\/p>\n Even if you couldn\u2019t care less about market makers\u2019 financial health, this pivot toward a much more TradFized paradigm\u200a\u2014\u200ahence, more financially secure\u200a\u2014\u200ahas a direct ripple effect for retail investors, who can only benefit from deeper scrutiny of token projects, helping them avoid becoming unwilling exit liquidity.<\/p>\n Nefture<\/em><\/a> is a <\/em>Web3 real-time security and risk prevention platform<\/em><\/strong> that detects on-chain vulnerabilities and protects digital assets, protocols and asset managers from significant losses or\u00a0threats.<\/em>Nefture core services includes <\/em>Real-Time Transaction Security<\/em><\/strong> and a <\/em>Threat Monitoring Platform<\/em><\/strong> that provides accurate exploits detections and fully customized alerts covering hundreds of risk types with a clear expertise in\u00a0DeFi.<\/em>Today, Nefture proudly collaborates with leading projects and asset managers, providing them with unparalleled security solutions.<\/em>Book a demo<\/em><\/strong><\/a>\u00a0<\/em><\/strong>\ud83e\udd1d<\/em><\/p>\n When Crypto Market Makers Lose Trust: From Blind Faith to Institutional-Grade Scrutiny<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" The crypto market-making ecosystem has endured two traumatic events in just a few short\u00a0months. The MOVE and Mantra \u201cincidents\u201d exposed the extent of behind-the-scenes maneuvering that undermines not only diligent market-makers but also retail investors. Hidden contracts, unknown offshore entities, backchannel deals, shadow decision-makers, and coordinated insider extraction\u200a\u2014\u200athese are shady practices one might expect, and […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-80042","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/80042"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=80042"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/80042\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=80042"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=80042"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=80042"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}The Role(s) of Crypto Market\u00a0Makers<\/h3>\n
TradFi Market\u00a0Makers<\/h4>\n
Crypto Market\u00a0Makers<\/h4>\n
Broken Trust: Secret Deals and Insiders\u2019 Pact<\/h3>\n
Movement Labs\u2019 MOVE Scandal: A Hidden Self-Destructing Deal<\/h4>\n
The Collapse of Mantra\u2019s OM: A Case of Insider Manipulation?<\/h4>\n
The Birth of a New Paradigm?<\/h3>\n
About us<\/h3>\n