DeFiance Capital Founder Warns of Rising Price Manipulation Amid Mantra and Story Protocol Crashes

Arthur Cheong, the founder of DeFiance Capital, issued a sharp warning this week about the rising prevalence of price manipulation across the crypto market—a trend he says is eroding investor trust and turning the space into what he calls a “lemon’s market,” where insiders reap profits while retail participants bear the risk.

In a post on X dated April 14, Cheong didn’t mince words. He claimed that an increasing number of crypto projects are secretly working with market makers to artificially prop up token prices. This behind-the-scenes coordination, he argued, creates an opaque environment where it’s nearly impossible to tell whether price action is driven by real demand or manufactured by insiders pulling the strings. For him, it’s a structural flaw that—if left unaddressed—renders a large portion of the market “uninvestable.”

His remarks came in the aftermath of the Mantra token collapse, where OM lost 90% of its value in under 24 hours, wiping out over $5 billion in market cap. That crash raised serious red flags after on-chain sleuths noticed millions of OM tokens were sent to OKX shortly before the plunge—a move some interpreted as insider selling. Mantra’s CEO denied wrongdoing, pointing the finger at forced CEX liquidations, but the damage to investor confidence was already done.

Not long after, another major token—Story Protocol—tanked 25% in a single hour, falling from $4.24 to $3.02 before partially recovering. Once again, the bulk of trading volume came from Binance and OKX, the same exchanges implicated in the Mantra fallout. Binance cited liquidations; OKX pointed to sudden tokenomics changes and suspicious wallet activity. But the conflicting explanations only deepened suspicion, adding fuel to the fire.

What’s more concerning is that the manipulation isn’t confined to centralized exchanges. Just last month, a trader exploited a loophole on the decentralized exchange Hyperliquid by opening a $5 million short position on the JELLY token, then intentionally driving the price up to trigger their own liquidation. The result? Hyperliquid’s insurance vault absorbed the loss. According to Oak Security’s Dr. Jan Philipp Fritsche, this was “a textbook case of unpriced vega risk,” proving that even in DeFi, where code is supposed to be law, human ingenuity and asymmetric incentives can still break the system.

Cheong’s point is clear: the current state of crypto markets is unsustainable. As more investors find themselves on the wrong side of orchestrated crashes and shadowy tokenomics, the sector risks alienating the very people it claims to empower. Unless exchanges, protocols, and regulators work together to bring transparency and accountability, these manipulative practices will continue to haunt the space.

And perhaps even more troubling is that, for now, there’s little consequence for bad behavior. Tokens can crash, insiders can profit, and no one is held accountable. Until that changes, Cheong warns, the gap between public faith and private manipulation will only grow wider—and crypto’s promise of financial freedom will continue to ring hollow.