Crypto Market Faces Manipulation Concerns, 90% Token Drops

Arthur Cheong, the founder of DeFiance Capital, has expressed significant concerns about the state of the cryptocurrency market, particularly highlighting the issue of market manipulation. Cheong asserts that centralized exchanges (CEXs) are overlooking the collusion between market makers and projects, which artificially sustains token prices, making the market increasingly "uninvestable."

Cheong's concerns are rooted in the observation that market makers and crypto projects often work together to create artificial prices that can be maintained for extended periods. This practice makes it difficult for investors to determine whether token prices are a result of genuine demand and supply or manipulated to achieve other objectives. Cheong warns that if the industry does not address these issues, a significant portion of the crypto market will remain uninvestable for the foreseeable future.

Cheong describes the altcoin market as a "lemon’s market," where low-quality products drive out the good due to information asymmetry. He criticizes the pricing of token generation events in 2025, stating that the assets' prices dropped by 70% to 90% within a few months of listing, leaving buyers with substantial losses. Cheong emphasizes that the current state of the liquid crypto market is a "complete black box," making it challenging to discern the true drivers of token prices.

Cheong's warnings come at a time when the cryptocurrency market is already facing concerns over liquidity and trust. The recent collapse of MANTRA’s native token, OM, which saw its market value plummet by 90% in a matter of hours, has sparked fears of insider activity and manipulation. Blockchain data revealed unusual activity in the days leading up to the incident, with 17 wallets sending a significant amount of OM tokens to exchanges. Two of these wallets were linked to Laser Digital, a known investor in MANTRA, raising suspicions of insider selling. Additionally, whale OM holders moved a substantial number of tokens to OKX, further fueling fears of a planned sell-off.

Cheong's comments underscore the need for greater transparency and regulation in the cryptocurrency market. He argues that unless major players take action to address these issues, the market will continue to be plagued by manipulation and reduced trust, making it increasingly difficult for serious investors to participate. The recent incidents serve as a stark reminder of the risks associated with the cryptocurrency market and the need for greater oversight and accountability.