Movement Labs has commenced Chapter 11 bankruptcy proceedings, disclosing assets not exceeding $500,000 and liabilities that may reach up to $10 million, following over a year of difficulties related to the MOVE token.
Summary
- Movement Labs has sought Chapter 11 protection, reporting liabilities that could total $10 million.
- Rushi Manche stands as the key unsecured creditor, asserting a claim of over $1.6 million.
- Move Industries insists that its operations and blockchain development are not impacted by this filing.
Court records show that MVMT Labs filed its bankruptcy petition on July 15 in the U.S. Bankruptcy Court for the District of Delaware. The original creator of the Movement blockchain has indicated assets ranging from $100,001 to $500,000 and liabilities potentially hitting $10 million, with involvement from as many as 299 creditors.
Former co-founder and CEO Rushikesh “Rushi” Manche holds the largest unsecured claim exceeding $1.6 million, as detailed in the filing. The document includes various claimants, such as the Delaware Division of Corporations, Move Industries, Anchorage Digital, and security auditor OtterSec, with the Delaware agency claiming about $459,000.
Although he was removed from the company in May 2025, Manche maintains a 34.25% equity stake in Movement Labs. He previously initiated legal action against the company in the Delaware Court of Chancery, successfully obtaining reimbursement for legal expenses related to a U.S. Department of Justice grand jury investigation concerning the MOVE launch.
Movement Labs originally served as the main R&D entity for the Movement Network, launched as an Ethereum layer-2 utilizing the Move programming language. Meta initially created Move for its now-defunct Libra and Diem digital currency projects.
Prior to the token complications, Movement Labs had secured substantial venture capital funding, raising $38 million in a Series A round led by Polychain Capital, and was reported in January 2025 to be approaching a $100 million fundraising round with a projected valuation of $3 billion.
MOVE scandal left lasting damage
The situation at Movement Labs deteriorated after the MOVE token debuted on exchanges in December 2024. An investigation by CoinDesk revealed that a market-making agreement allocated 66 million MOVE tokens, approximately 5% of the total supply, to a less prominent intermediary, Rentech.
Internal documents reviewed by CoinDesk indicated that wallets linked to the market maker Web3Port sold these tokens just one day after the MOVE launch on exchanges, yielding about $38 million. This liquidation concentrated a significant share of the publicly traded supply under one entity’s control and led to a sharp decline in the token’s market price.
Concerns arose about the structure of the agreement since Rentech was identified in contracts as both an agent for the Movement Foundation and affiliated with Web3Port. Rentech has denied any misconduct; meanwhile, Movement co-founder Cooper Scanlon notified employees that the project was examining whether it had been misled.
Crypto founder Zaki Manian analyzed the documents and asserted that the terms incentivized the artificial inflation of MOVE’s value before selling tokens to retail investors.
“Even taking part in a conversation where that’s documented is preposterous,” Manian told CoinDesk.
In response, Binance subsequently banned the market-making account due to perceived misconduct, freezing the associated profits from the token sales. Following that, the Movement Network Foundation announced a $38 million MOVE repurchase initiative funded by the recovered assets and enlisted the external firm Groom Lake to further probe into the agreement.
Leadership changes followed the inquiry, with Movement Labs dismissing Manche after accusing him of entering into undisclosed agreements, and core development responsibilities were handed over to the newly established Move Industries, led by CEO Torab Torabi.
Trading disruptions intensified the external impact. The Block reported that both Binance and Coinbase halted trading of MOVE after the controversy arose. TradingView data referenced in the initial report indicated that MOVE was valued at roughly $0.0108 following the bankruptcy announcement, having risen less than 1%.
Move Industries remains outside the filing
Move Industries has clarified that it is not implicated in the Chapter 11 proceedings and continues to run the blockchain independently from Movement Labs. In addressing the bankruptcy filing on X, Torabi stressed the legal distinction between the two entities.
“Move Industries is operating normally. We are concentrating on our development efforts.”
In December 2025, the Movement Network Foundation confirmed that Move Industries had been appointed as the primary service provider for the network and assumed critical operational responsibilities. Under this arrangement, the foundation acts as the independent steward of the network, while Move Industries oversees development, operations, and ecosystem tasks.
After the separation, Move Industries transitioned Movement from being an Ethereum layer-2 to an independent layer-1 network, setting the stage for stablecoin payments, cross-border transfers, and remittances in emerging markets.
Movement Labs is not the only company recently seeking U.S. bankruptcy protection; Bitcoin Depot, listed on Nasdaq, also filed for Chapter 11 in May within the Southern District of Texas, aiming to cease its crypto ATM operations and liquidate assets under court jurisdiction.
Unlike Movement Labs, Bitcoin Depot attributed its struggles to regulatory pressures, decreased transaction limits, legal disputes, and enforcement actions that rendered its business model unviable. The company decommissioned over 9,000 kiosks and included its Canadian divisions in the court-monitored proceedings, according to its announcement on May 18.
