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The crypto and web3 sectors are notorious for their volatility — a byproduct of the industry’s young age and lack of regulatory oversight. Unlike traditional markets, many of these digital assets are not regulated securities, allowing founders and early holders with significant portions of the token supply to liquidate their positions with little restriction.
This was starkly illustrated in the recent Mantra (OM) crash, where a rapid sell-off by a small number of wallets contributed to a dramatic market collapse and the token lost 90% of its value, erasing $5 billion in minutes.
Events like these continue a pattern of token sell-offs by large holders, whether founders, early investors, or affiliated market makers, that have disrupted market stability. When large holders offload tokens, it often triggers red flags and panic selling among retail investors—many of whom lack the experience or context to respond rationally.
One potential solution is private selling. This is exactly the kind of infrastructure Panther is working to establish, aiming to bring more responsible practices to the forefront of web3, and helping to normalize structured exits and reduce volatility.
The exact cause of the collapse remains under investigation, but several factors have been identified:
- Forced liquidations: Mantra’s CEO, John Patrick Mullin, attributed the crash to “reckless forced closures initiated by centralized exchanges,” suggesting that a large OM holder’s collateral was liquidated, leading to a cascade of sell-offs.
- Token supply concentration: Before the crash, concerns were raised about the concentration of OM tokens, with reports indicating that a small number of wallets held a significant portion.
- Investor activity: On-chain data revealed that 17 wallets moved approximately 43.6 million OM tokens (worth around $227 million) to exchanges shortly before the crash. Some of these wallets were reportedly linked to major investors like Laser Digital and Shorooq Partners, though both firms have denied involvement in any token sales during this period.
Why crashes like these happen
While there is no confirmed evidence that the Mantra founding team directly initiated the sell-off, the lack of transparency and concentration of token holdings contributed to speculation and market instability. It’s worth noting that large-scale liquidations may originate from affiliated entities such as market makers, who often receive allocations from core teams or venture investors.
There are several reasons behind these types of market events. In some cases, bad actors exploit the system through rug pulls or deliberate market manipulation. However, more commonly, founders and core contributors are simply realizing profits. While this can be unsettling for investors, this volatility is a characteristic of the wider cryptocurrency market.
The issue arises when these exits are not managed transparently or responsibly, often triggering panic among holders, especially those who may lack experience and are more vulnerable to market volatility.
The difference often lies in how these events are structured. Take Mantra, for instance. When a single individual or entity controls a large portion of the token supply without proper legal or technical safeguards like vesting schedules, it introduces significant sell pressure risk to the market. This concentration of control becomes a red flag for investors.
Contrast that with Binance’s approach to Binance coin (BNB). While the founding team also held a significant allocation, the process was handled with structured vesting and supply controls, allowing for a healthier ecosystem and long-term growth.
That said, there’s a delicate balance. Overly restrictive vesting or regulatory frameworks can deter early contributors and investors from launching new ventures. If the path to realizing returns is blocked entirely, the broader industry risks stagnation.
Traditional finance—A stark difference
In traditional equity markets, such as those governed by the Nasdaq, NYSE, or London Stock Exchange, insider activity is subject to strict oversight. Major shareholders and company insiders are legally required to disclose any significant sales or changes in ownership, regardless of the transaction size. These disclosures are part of a broader compliance framework designed to protect investors.
Public companies often spend tens of millions annually on regulatory filings, audits, and transparency measures—costs incurred specifically to ensure accountability and mitigate the risk of insider manipulation. Without such safeguards, market participants would be exposed to unchecked selloffs and price manipulation by those with privileged information.
In contrast, the lack of standardized regulatory enforcement in many crypto markets allows insiders to operate with far fewer restrictions, increasing risk for everyday token holders.
While the crypto space has democratized token issuance and fostered rapid innovation, it has also enabled scenarios where individuals and teams can issue tokens with minimal governance or compliance obligations.
While this drastically lowers the barrier to entry and fuels rapid innovation, it also introduces risk for token holders. Without enforced disclosure requirements, vesting mechanisms, or accountability standards, insiders can offload large portions of their holdings without warning, often leaving retail participants exposed to abrupt market shocks.
Privacy swap—How to find that balance
One emerging concept in Panther’s architecture is the idea of Privacy-Preserving Swaps in entity-managed trading zones. These are envisioned as environments where regulated entities (such as virtual assets service providers) could facilitate DeFi transactions while leveraging zero-knowledge proofs to verify transactional data, without exposing sensitive transaction data. For instance, ownership concentration risks could be mitigated through auditable privacy frameworks that confirm vesting compliance or sell limits without revealing wallet identities.
When stakeholders fear large, undisclosed liquidations, a privacy-compliant system could support structured transparency, alerting the market while preserving privacy, and reducing the risk of panic-induced volatility.
