Movement Labs declares bankruptcy after MOVE token scandal

Movement Labs filed for bankruptcy with liabilities of up to US$10 million.

Movement Labs has filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Its assets do not exceed US$500,000 and liabilities may reach US$10 million. Previously, the company had been in turmoil over the MOVE token for more than a year.

Core Summary

Movement Labs filed for Chapter 11 bankruptcy protection with up to US$10 million in debt. Rushi Manche holds its largest unsecured debt, worth more than $1.6 million. Move Industries said its operations and development of the Movement blockchain were not affected.

Bankruptcy Filing Details

Court records show that MVMT Labs filed an application with the U.S. Bankruptcy Court of Delaware on July 15. As the original developer of the Movement blockchain, the company has listed assets of between $100,000 and $500,000, liabilities of up to $10 million, and 299 creditors.

According to the application documents, former co-founder and CEO Rushikesh "Rushi" Manche holds the largest unsecured creditor's right, in an amount of more than $1.6 million. The filing also lists creditors such as the Delaware Department of Corporate Affairs, Move Industries, Anchorage Digital and safety audit firm OtterSec, among which the Delaware agency claims to be in arrears of $459,000.

Although Manche was dismissed in May 2025, he still holds a 34.25% stake in Movement Labs. Previously, he had sued the company in the Delaware Chancery Court and successfully obtained payment of legal fees related to a U.S. Department of Justice grand jury investigation into the MOVE issuance.

Continuing impact of the MOVE scandal

Movement Labs 'problems intensified after MOVE launched its exchange in December 2024. The investigation found that a market-making agreement handed 66 million MOVE tokens (about 5% of the supply) to an unknown middleman named Rentech.

According to internal documents, the wallet associated with the market maker Web3 Port sold the tokens one day after it went online on the MOVE exchange, making a profit of approximately US$38 million. The sell-off put most of the publicly traded supply under the control of a single counterparty and caused a significant drop in token prices.

The structure of the protocol has also been questioned because Rentech appears in the contract as both a Movement Foundation agent and a Web3 Port associate. Rentech denied making false statements, while Movement co-founder Cooper Scanlon told employees that the project was investigating whether it had been misled.

While reviewing documents, cryptocurrency founder Zaki Manian argued that these terms created an incentive to boost the valuation of MOVE before selling tokens to retail investors.

Subsequently, an exchange banned the market-making account for misconduct and froze profits related to the token sale. The Movement Network Foundation subsequently announced that it would use the recovered funds to launch a $38 million MOVE repurchase program and hired an outside company, Groom Lake, to investigate the agreement.

The company's leadership changed after the investigation. Movement Labs accused Manche of signing an undisclosed agreement and firing it, while transferring core development responsibilities to newly formed Move Industries, led by CEO Torab Torabi.

Trading interruptions exacerbated losses. According to reports, multiple exchanges have suspended MOVE trading after the issuance dispute. After the bankruptcy news was announced, relevant data showed that the MOVE price was close to US$0.0108, an increase of less than 1%.

Move Industries is not affected by bankruptcy

Move Industries denies any connection to the Chapter 11 bankruptcy and continues to operate blockchain independently of Movement Labs. In response to the bankruptcy filing on social media, Torabi emphasized that the two companies are separate legal entities.

He said: "Move Industries is operating normally. We continue to work hard in construction. "

The Movement Network Foundation confirmed in December 2025 that Move Industries has become the network's primary service provider and assumes its primary operational responsibilities. Under the arrangement, the foundation will remain as an independent network manager, while Move Industries will be responsible for development, operations and ecosystem work.

After the company split, Move Industries transformed Movement from the Ethereum Layer 2 network to a separate Layer 1 network. Since then, the company has positioned the chain as an infrastructure for stablecoin payments, cross-border transfers and remittances in emerging markets.

Movement Labs is the second well-known cryptocurrency company to seek U.S. bankruptcy protection in recent months. Previously, another Nasdaq-listed company had filed for Chapter 11 bankruptcy to shut down its cryptocurrency ATM business and sell assets under court supervision.

Unlike Movement Labs, the company blames stricter state regulations, lower transaction limits, litigation and enforcement pressures on the unsustainability of its model.