Movement Labs’ Chapter 11 filing lays bare governance fallout from MOVE scandal
Movement Labs has filed for bankruptcy with up to $10m in liabilities, closing a chapter marked by a DOJ probe and disputed token sales.
Movement Labs, the developer entity behind the Movement blockchain, has filed for Chapter 11 bankruptcy protection, drawing a formal legal line under more than a year of controversy surrounding its MOVE token. Court filings in the U.S. Bankruptcy Court for the District of Delaware, submitted on 15 July under the corporate name MVMT Labs, list assets of no more than $500,000 against liabilities that could reach $10 million.
The filing names as many as 299 creditors, with the largest unsecured claim — more than $1.6 million — held by Rushikesh “Rushi” Manche, the company’s ousted co-founder and former chief executive. Manche was removed from the firm in May 2025 but retains a 34.25% equity stake, according to the court record.
A legal legacy from the DOJ probe
Manche’s claim traces back to litigation he brought against the company in the Delaware Court of Chancery, through which he secured payment of legal costs tied to a U.S. Department of Justice grand jury investigation into the MOVE token’s launch. That the largest single claim in the bankruptcy stems directly from regulatory scrutiny underscores how legal exposure, rather than operating losses alone, has driven the firm toward insolvency.
Other named claimants include the Delaware Division of Corporations, which is reportedly owed $459,000, alongside Move Industries, custodian Anchorage Digital and security auditor OtterSec. Move Industries has said its own operations and ongoing development of the Movement blockchain remain unaffected by MVMT Labs’ filing.
Token distribution under scrutiny
Movement Labs originally served as the primary research and development company behind Movement Network, an Ethereum layer-2 built on the Move programming language, which Meta developed for its now-abandoned Libra and Diem stablecoin projects. Before its troubles began, the company had drawn significant institutional backing, raising $38 million in a Series A round led by Polychain Capital, and was reportedly close to closing a further $100 million round at a $3 billion valuation in January 2025, according to Reuters.
That trajectory reversed after MOVE began trading on exchanges in December 2024. An investigation by CoinDesk found that a market-making agreement had allocated 66 million MOVE tokens — roughly 5% of total supply — to an intermediary called Rentech. Wallets linked to market maker Web3Port reportedly sold those tokens within a day of MOVE’s exchange debut, generating approximately $38 million and concentrating a substantial share of the publicly traded supply under a single counterparty, which contributed to a sharp price decline.
Scrutiny intensified after CoinDesk reported that Rentech appeared in contractual documents both as an agent of the Movement Foundation and as an affiliate of Web3Port — a structure that raised conflict-of-interest concerns. Rentech has denied misrepresenting itself, while Movement co-founder Cooper Scanlon told employees the project was examining whether it had been misled. Reviewing the arrangement, crypto founder Zaki Manian said: “Even participating in a discussion where that’s on paper is insane.” Binance subsequently banned the market-making account involved.
Wider implications for token governance
The bankruptcy caps a saga that has become a reference point for scrutiny of market-making arrangements struck during token launches, particularly where intermediaries hold overlapping roles that blur accountability. For institutional investors and exchanges assessing new listings, the case illustrates how opaque distribution terms can translate into both reputational and legal exposure long after a token’s initial debut.
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