Downfall of Movement Labs: The Chaotic, Troubled Scene
Market Maker Scandal Leads to Co-Founder Suspension at Movement Labs
In the world of Ethereum layer-2 startups, Movement Labs has become the center of a storm.
On a tumultuous Thursday, the company sorrowfully announced the suspension of co-founder Rushi Manche as they navigate the murky waters of a governed probe.
The announcement came after reports emerged that Movement Labs entered a questionable deal with Rentech, a company posing as a subsidiary of Web3Port. This shady agreement, riddled with deception, saw the dumping of 66 million MOVE tokens on the open market, sparking widespread outrage.
"This decision was made in light of ongoing events and as the third-party review is still being conducted by Groom Lake regarding organizational governance and recent incidents involving a market maker," Movement Labs declared on X.
The suspension follows claims that Rentech, in a classic bait-and-switch tactic, allegedly presented itself as both a representative of Web3Port and an agent acting on behalf of the Foundation, pumping and dumping tokens for its own profit.
Manche is alleged to have forwarded the deal, despite legal concerns and conflict warnings, and maintained involvement in both Movement Labs and the nonprofit Foundation, despite their intended separation.
Manche has yet to respond to Decrypt's request for comment.
The Rentech contract was reportedly flagged as deeply problematic by Movement Foundation's legal counsel, with one lawyer going so far as to call it "possibly the worst agreement" they had ever reviewed. In spite of this warning, the deal was approved, and within 24 hours of MOVE's launch in December 2024, the dump occurred.
The third-party governance audit, spearheaded by Groom Lake, is investigating Manche's role in pushing the deal through.
In March 2025, Binance expelled the market maker responsible for the MOVE dump, citing misconduct, and froze the $38 million it had garnered from the scheme. The exchange accused the firm, widely suspected to be Rentech, of manipulating the market.
Movement then countered Binance's allegations, stating that the dump took place "against our wishes, without our consent, and was in breach of our agreement."
The turmoil deepened on May 13, 2025, when crypto exchange Coinbase announced it would suspend trading of MOVE as of May 15, citing a routine asset review. Following this news, MOVE plummeted 14% to $0.20, its all-time low, and dropped 21% in a single day, according to Coingecko data.
Within Movement Labs' Telegram group, moderator Merq confirmed Manche's suspension and urged the community to remain patient and wait for the results of the audit.
"The Foundation has commissioned a third-party investigation," Merq wrote. "We are waiting for the results so that we can all understand more clearly what has happened."
Edited by Sebastian Sinclair
Daily Debrief Newsletter
Sources:1. Movement Labs' co-founder stepped down amid governance investigation2. Movement Labs Separates from Co-Founder Rushi Manche as It Navigates a Governance Scandal3. Binance Offloads Market Maker Amid MOVE Token Dump Probe4. Exclusive: Web3Port Affiliate Dumped $38M in MOVE Tokens After Launch, Sparking Governance Probe at Movement Labs5. Coinbase to suspend trading of MOVE, a token facing governance probe
- The ethical conduct of crypto businesses came into question after reports emerged that Movement Labs, an Ethereum layer-2 startup, entered a questionable deal with Rentech, a company posing as a subsidiary of Web3Port.
- The deal, which saw the dumping of 66 million MOVE tokens on the crypto exchange, sparked widespread outrage and prompted Movement Labs to announce the suspension of co-founder Rushi Manche.
- The third-party review, conducted by Groom Lake regarding organizational governance and recent incidents involving a market maker, is investigating Manche's role in pushing the deal through.
- In the world of finance and technology, the fallout from Movement Labs' troubles has raised concerns about Initial Coin Offerings (ICOs) and the transparency of crypto exchanges.
- As the investigation continues, many in the crypto community are questioning the role of technology in maintaining fair and ethical business practices, particularly in Ethereum-based startups like Movement Labs.
