A market maker sells your token as part of normal quoting, so selling alone is not dumping; the warning sign is sustained net selling of loaned or provided inventory while spreads widen and depth thins, contrary to the agreed KPIs. To check, compare the firm’s reports on inventory and loaned-token balances with exchange data and the on-chain movements of the tokens you lent, review whether option strikes give it a reason to sell, and ask for a written explanation. If the data shows the firm is not meeting KPIs or is net selling loaned tokens, use the contract’s reporting, termination, and token-return clauses, and get legal advice.
Key takeaways
- Selling into buyers is normal quoting; sustained net selling of your inventory is not.
- Check reports against exchange data and the on-chain trail of loaned tokens.
- Option terms shape incentives: know your strikes and exercise windows.
- Respond with data and the contract’s reporting, termination, and return clauses.
Normal quoting or a real problem?
| Usually normal | Worth investigating |
|---|---|
| The firm sells into buy orders and buys into sell orders | Sustained net selling of loaned tokens over weeks |
| Price falls with the broader market or after an unlock | Price falls faster than comparable tokens with no news |
| Spread widens briefly during volatility | Spread and depth stay below KPIs for days |
| Inventory moves between venues | Loaned tokens move to wallets or venues not in the agreement |
| Reports arrive on schedule | Reports are late, partial, or don’t match exchange data |
Five checks
- KPIs vs exchange data. Measure spread, depth, and uptime per venue yourself and compare with the firm’s report.
- Loaned-token balance. Ask for the current balance of loaned tokens and where they sit. Follow the on-chain trail from the wallets you sent them to.
- Net position over time. Ask for net buys minus net sells per week. A steady one-way drift is the signal.
- Option incentives. Check your strikes and exercise windows in the token loan terms. Deep in-the-money or out-of-the-money options change what the firm gains from price moves.
- Other sellers. Check unlocks, team and investor wallets, and large holders before blaming the market maker. See token unlocks and liquidity.
How to respond
- Put your concerns in writing, with the data, and ask for a written explanation.
- Ask for any missing reports the contract requires.
- If KPIs are not met, use the contract’s remedy, termination, and token-return clauses; take legal advice first.
- Line up an alternative before you terminate, so the book is not left empty. A second opinion helps.
Frequently asked questions
Is it normal for a market maker to sell my token?
Yes. A market maker quotes both sides, so it sells when buyers arrive and buys when sellers arrive. Over time its net position should stay within the inventory ranges agreed in the contract. What is not normal is sustained net selling of loaned tokens while spread and depth fall below the agreed KPIs.
How can we check what our market maker is doing?
Ask for the reports the contract provides: inventory and loaned-token balances, trades, and KPI performance per venue. Compare them with exchange order-book data and with on-chain transfers from the wallets the loaned tokens went to. Gaps between the report and the data are the thing to ask about. See market maker KPIs.
What should we do if the market maker is not meeting its KPIs?
Raise it in writing with the data, ask for an explanation and a fix by a date, and check the termination and token-return clauses. If the agreement has none, that is a lesson for the next one; see the agreement checklist. Take legal advice before terminating.
Can a market maker be prosecuted for manipulating a token?
Yes. In 2024 U.S. authorities charged several firms that marketed themselves as market makers with wash trading and price manipulation on behalf of token clients. If you believe you were sold manipulation as a service, speak to a lawyer.
Sources
- U.S. SEC press release 2024-166 (9 Oct 2024)
- U.S. DOJ, District of Massachusetts: Eighteen individuals and entities charged in international operation targeting widespread fraud and manipulation in the cryptocurrency markets
- Forgd Academy: How are loan plus call option engagements typically structured?
Last reviewed 12 November 2026. Exchange and platform policies change; always confirm on the official page before acting.
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