Two of the most tumultuous token implosions of 2025, Movement Labs’ MOVE and Mantra‘s OM are sending shockwaves through the crypto market-making sector. With forced liquidations, opaque token unlocks, and alleged insider dealings, the scandals have exposed the fragile mechanics behind liquidity provision and the dangerous opacity in token economics.

As OM plummeted more than 90% in a matter of hours and MOVE’s collapse revealed deep conflicts of interest, the crypto world is grappling with a harsh new reality in a market where float is fiction, reputations are no longer enough.

Market Makers Beyond the Bid-Ask Spread

In traditional finance, market makers stabilise markets by offering tight, regulated bid-ask spreads. In crypto, however, they often wear many more hats. These firms negotiate pre-launch allocations, accept token lockups, design liquidity strategies for centralised exchanges, and sometimes even take equity stakes or advisory roles in the projects they support.

The result is a deeply entangled web of incentives and obligations. In such an environment, market-making is no longer a neutral act of facilitating liquidity it becomes a strategic function at the heart of token distribution and project perception.

However, this model carries a dangerous side effect: private deals and handshake agreements that can bypass governance frameworks like DAOs and tokenholder protections. The MOVE scandal is a case in point, a CoinDesk exposé revealed how Movement Labs executives colluded with their own market maker to dump $38 million worth of MOVE tokens on the open market, blindsiding investors and destabilising the price.

The Fallout: From Casual Trust to Rigorous Scrutiny

These events have triggered a crisis of confidence within the crypto liquidity landscape. Projects, funds, and trading desks are now questioning how much trust they can place in counterparties.

According to Metalpha, a Hong Kong-based market making firm, the scandals have prompted a strategic overhaul. “Our approach now includes more extensive preliminary discussions and educational sessions with project teams,” the company told CoinDesk. Their new deal structures now prioritise long-term alignment and explicitly prohibit unethical behaviours like excessive dumping and volume manipulation.

This sentiment is being echoed across the industry. Firms are becoming increasingly cautious, demanding greater transparency and clearer documentation of token vesting schedules, unlocks, and secondary sales. Many are simply walking away from deals that lack clarity or contain too much off-chain risk.

Max Sun, head of Web3 ecosystem at Metalpha, summed it up starkly: “The era of presumptive trust has concluded.”

Shadow Markets and Distorted Tokenomics

Beyond the scandals themselves lies a murkier undercurrent, the secondary OTC (over-the-counter) market, where locked tokens are traded long before official vesting schedules begin. These trades, usually struck between early investors, funds, or private syndicates, are rarely disclosed and can deeply distort the perceived supply and demand of a token.

Min Jung, analyst at Presto Research

“The secondary OTC market has changed the dynamics of the industry,” said Min Jung, analyst at Presto Research. Tokens like $LAYER, $OM, and $MOVE, often exhibit suspicious price action because their true supply has been quietly inflated through these off-market deals.

The implications are severe. Market makers, tasked with managing liquidity based on public data, are now flying blind. When unlock schedules don’t match real-world supply, price discovery becomes a fiction, and even sophisticated algorithms are rendered ineffective.

A Reckoning for the Crypto Liquidity Model

The MOVE and OM incidents are more than isolated collapses, they are catalysts for systemic change. Crypto’s reliance on informal, relationship-based liquidity models is being tested, and the consequences are forcing a long-overdue reckoning.

For market makers, this means rethinking their underwriting practices, integrating new risk models that account for off-chain factors, and demanding clearer, on-chain proof of token supply schedules. For projects, it signals the end of reputation-based fundraising and a pivot towards verifiable transparency.