Crypto Meltdown Threatens Mantra-DAMAC Alliance

ByMaya Harborlight

The high-profile $1 billion partnership between real estate giant DAMAC Properties and blockchain platform Mantra faces an uncertain future following the catastrophic collapse of Mantra’s OM token over the weekend. Industry insiders report that DAMAC executives are conducting an emergency assessment of the relationship after OM plummeted over 90% in just hours on Sunday, falling from $6.30 to under $0.50 and wiping out billions in market value.

The January 2025 agreement—widely heralded as a breakthrough for blockchain adoption in traditional real estate—aimed to tokenize DAMAC’s extensive portfolio of luxury properties, data centers, and infrastructure assets on the Mantra blockchain. That ambitious vision now hangs in the balance as questions swirl about Mantra’s stability, token economics, and market conduct.

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Dubai’s Regulatory Reputation on the Line

The collapse has put Dubai’s Virtual Assets Regulatory Authority (VARA) in a difficult position, having granted Mantra a coveted virtual asset service provider license just two months before the crash. This regulatory approval, which permitted Mantra to operate exchanges and broker-dealer services within the UAE, lent significant credibility to the project and its tokenization ambitions, according to Cointelegraph.

“Dubai has invested considerable resources in positioning itself as a forward-thinking yet secure jurisdiction for digital assets,” explains regulatory consultant Sarah Al-Jabri. “The Mantra situation creates a complex challenge: VARA must demonstrate it can protect investors without stifling innovation in emerging technologies.”

Sources familiar with the matter indicate that VARA officials have requested detailed information from Mantra regarding the token collapse, including trading data, wallet movements, and communications with exchanges. The regulatory body’s response could set important precedents for how Dubai handles future crypto market disruptions.

Competing Narratives Emerge

Mantra co-founder JP Mullin has vehemently denied allegations of wrongdoing, attributing the collapse to “reckless forced closures initiated by centralized exchanges” rather than actions by the project team. “The timing and depth of the crash suggest that a very sudden closure of account positions was initiated without sufficient warning or notice,” Mullin stated, according to Fast Company.

However, cryptocurrency exchange OKX’s investigation revealed “major changes to the MANTRA token’s tokenomics model since October 2024” and evidence that “several on-chain addresses have been executing potentially coordinated large-scale deposits and withdrawals across various centralized exchanges since March 2025.” These findings suggest more complex dynamics than simple exchange liquidations.

On-chain data shows 17 wallets deposited 43.6 million OM tokens (worth approximately $227 million) to exchanges before the crash—a substantial amount given concerns about token distribution, with the Mantra team reportedly controlling 90% of the circulating supply. This concentration has fueled speculation about potential market manipulation.

Real Estate Tokenization Faces Existential Questions

The incident has broader implications for the nascent real-world asset (RWA) tokenization sector, which had been gaining significant institutional interest. Major financial institutions including JPMorgan, Goldman Sachs, and BlackRock had been exploring tokenization initiatives, attracted by promises of improved liquidity, reduced settlement times, and fractional ownership possibilities.

“The fundamental value proposition of tokenizing real estate and other physical assets is being stress-tested by this event,” notes blockchain economist Patricia Wong. “If tokens supposedly backed by billions in real estate can experience 90% crashes overnight, institutions will rightfully question whether tokenization truly delivers the stability advantages being marketed.”

Trading firm Laser Digital, part of the Nomura Group, found itself forced to publicly deny involvement in the crash as speculation spread about which parties might have triggered the selling. “Assertions circulating on social media that link Laser to ‘investor selling’ are factually incorrect and misleading,” the firm stated, according to CoinDesk.

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Market Recovery Prospects Remain Dim

As of Monday afternoon, the OM token was trading around $0.68, showing minimal recovery from its lows. Trading volume has exploded by 3,425% to $2.6 billion, suggesting intense speculative activity but not necessarily sustainable buying pressure. The token’s market capitalization has collapsed from around $6 billion to below $700 million.

The sudden devaluation has triggered approximately $72 million in forced liquidations across various trading platforms, affecting investors who had used leveraged positions to trade the token. Many retail investors have reported complete portfolio wipeouts in online forums, having concentrated their holdings in what was perceived as a relatively safe, asset-backed token.

“The reality is that most tokenized asset projects still rely on centralized control mechanisms and traditional legal structures,” explains digital asset attorney Michael Chen. “When those trust assumptions break down, as we’re seeing with Mantra, the blockchain component provides little additional protection for investors.”

For DAMAC and other real estate developers exploring tokenization, the Mantra collapse serves as a sobering reminder that blockchain technology, despite its promise, introduces new forms of financial complexity and risk that must be carefully managed to protect both corporate reputations and investor capital.

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