Movement Labs collapses into bankruptcy after MOVE token scandals

Movement Labs has filed for Chapter 11 bankruptcy with no more than $500,000 in assets and liabilities that could reach $10 million following more than a year of turmoil around the MOVE token.

Court records show that MVMT Labs submitted its petition on July 15 in the U.S. Bankruptcy Court for the District of Delaware. The original developer of the Movement blockchain listed between $100,001 and $500,000 in assets, up to $10 million in liabilities and as many as 299 creditors.

Former co-founder and chief executive Rushikesh “Rushi” Manche holds the largest unsecured claim at more than $1.6 million, according to the filing. The document also names the Delaware Division of Corporations, Move Industries, Anchorage Digital and security auditor OtterSec among the claimants, with the Delaware agency allegedly owed $459,000.

Despite being removed from the company in May 2025, Manche still owns a 34.25% equity stake in Movement Labs. He previously sued the company in the Delaware Court of Chancery and secured payment of legal expenses connected to a U.S. Department of Justice grand jury investigation into the MOVE launch.

Movement Labs originally served as the main research and development company for Movement Network, which launched as an Ethereum layer-2 using the Move programming language. Meta initially developed Move for its abandoned Libra and Diem digital currency projects.

Before the token controversy, Movement Labs had attracted substantial venture funding. The company raised $38 million in a Series A round led by Polychain Capital, while Reuters reported in January 2025 that it was close to completing another $100 million round at a proposed $3 billion valuation.

MOVE scandal left lasting damage

Movement Labs’ problems intensified after MOVE debuted on exchanges in December 2024. An investigation by CoinDesk found that a market-making agreement handed 66 million MOVE tokens, or about 5% of the supply, to a little-known intermediary called Rentech.

According to internal documents reviewed by CoinDesk, wallets linked to market maker Web3Port sold the tokens one day after MOVE’s exchange debut and generated about $38 million. The sale placed a large share of the publicly traded supply under one counterparty’s control and contributed to a steep fall in the token’s price.

Scrutiny also fell on the structure of the agreement because Rentech appeared in contracts both as a Movement Foundation agent and as a Web3Port affiliate, CoinDesk reported. Rentech denied misrepresenting itself, while Movement co-founder Cooper Scanlon told employees that the project was examining whether it had been misled.

Reviewing the documents, crypto founder Zaki Manian argued that the terms created incentives to raise MOVE’s valuation before selling tokens to retail traders.

“Even participating in a discussion where that’s on paper is insane,” Manian told CoinDesk.

Binance later banned the market-making account for what the exchange described as misconduct and froze the profits linked to the token sales. Movement Network Foundation subsequently announced a $38 million MOVE repurchase plan using the recovered funds and hired outside firm Groom Lake to investigate the agreement.

Leadership changes followed the inquiry. Movement Labs terminated Manche after alleging that he had signed undisclosed agreements, while the company transferred core development responsibilities to the newly formed Move Industries under chief executive Torab Torabi.

Trading disruptions compounded the damage. The Block reported that Binance and Coinbase suspended MOVE trading after the launch controversy, while TradingView data cited in the original report placed MOVE near $0.0108 following the bankruptcy news, with the token gaining less than 1%.

Move Industries remains outside the filing

Move Industries has denied any involvement in the Chapter 11 case and continues to operate the blockchain separately from Movement Labs. Addressing the filing on X, Torabi stressed that the two companies are distinct legal entities.

“Move Industries is operating normally. We continue to put our heads down and build.”

Movement Network Foundation confirmed in December 2025 that Move Industries had become the network’s primary service provider and assumed its main operating duties. Under that arrangement, the foundation remains the independent network steward, while Move Industries handles development, operations and ecosystem work.

Following the corporate separation, Move Industries converted Movement from an Ethereum layer-2 into an independent layer-1 network. The company has since positioned the chain as infrastructure for stablecoin payments, cross-border transfers and remittances in emerging markets.

Movement Labs is the second prominent crypto company to seek U.S. bankruptcy protection in recent months. In May, Nasdaq-listed Bitcoin Depot entered Chapter 11 in the Southern District of Texas to close its crypto ATM business and sell its assets under court supervision.

Unlike Movement Labs, Bitcoin Depot blamed tighter state rules, lower transaction limits, litigation and enforcement pressure for making its model unsustainable. The company took more than 9,000 kiosks offline and included its Canadian entities in the court-supervised process, according to its May 18 announcement.