Movement Labs Chapter 11: The Death of a Token, the Birth of a Precedent

The ledger remembers what the hype forgets. On July 15, 2025, Movement Labs (MVMT) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware. The filing lists assets up to $500,000 and liabilities up to $100 million. The lead debtor is MVMT Inc., the entity behind the Movement Network, an Ethereum L2 built on the Move virtual machine. The court docket reveals a grim picture: the company’s most significant unsecured creditor is its own co-founder, Rushikesh Manche, who holds a $1.6 million claim for legal fees incurred while defending himself against a U.S. Department of Justice grand jury investigation into MOVE token issuance. This is not a story of technical failure. It is a story of governance rot, token economics designed for extraction, and a co-founder turned adversary. The MOVE token is now functionally worthless. Yet the underlying Move language technology lives on—transferred to a new entity called Move Industries. We traded value for visibility, and lost both. Context: The Rise and Premise of Movement Network Movement Network launched as a Layer 2 scaling solution on Ethereum, leveraging the Move programming language—originally developed by Facebook for the Diem (formerly Libra) project. The pitch was compelling: bring the safety and expressiveness of Move to the Ethereum ecosystem, offering a potential upgrade path for Solidity developers. In April 2024, Movement Labs raised $38 million in a Series A round led by Polychain Capital, with participation from Hack VC, Coinbase Ventures, and others. The total funding reached $41.4 million. The valuation was not disclosed, but industry sources pegged it at over $300 million. The team promised a TPS of 10,000+ and a novel mechanism for sequencer decentralization. The token, MOVE, was issued in December 2024 via an airdrop and public sale. Within days, the token price plunged from an opening of $0.80 to under $0.10. Whispers of market maker misbehavior turned into a formal internal investigation. By February 2025, co-founder Rushikesh Manche was removed from the company. By July, the company filed for bankruptcy. Core: The Systematic Teardown Token Economics Design Flaw The core failure of Movement Labs was not the technology—it was the token launch model. The project followed the notorious “high FDV, low float” playbook popularized in 2024. At launch, only 8% of the total 10 billion MOVE supply was circulating. The rest was locked with team, investors, and the treasury. The market maker, whose identity remains sealed in court documents, was contracted to provide liquidity and stabilize the price. But instead, on the first day of trading, the market maker began selling large portions of its allocated inventory. On-chain analysis shows wallets associated with the market maker depositing over 200 million MOVE tokens to Binance and OKX within the first four hours of trading. The result was a cascade of selling pressure that the small community of retail buyers could not absorb. From my audit experience during the ICO era, I have seen this pattern before: a project pays a market maker with tokens, the market maker dumps them, and the project blames the market maker. The difference here is that Movement Labs actually launched an internal investigation, which led to the expulsion of the co-founder. This suggests the dumping was authorized—or at least known—by someone at the top. Internal Governance Collapse The internal investigation into the market maker’s role revealed a deeper schism. According to court filings, the board of directors determined that Rushikesh Manche had acted “in bad faith” regarding the market maker arrangement. Manche was removed as CEO and as a director in February 2025. He contested the removal, filing a claim for indemnification of legal fees incurred during the DOJ investigation. That claim is now the largest unsecured claim in the bankruptcy, at $1.6 million. The bankruptcy docket reveals that Manche retains his equity stake in MVMT Inc. The company’s bylaws allowed for indemnification of legal costs for directors and officers, but the board argued that Manche’s alleged bad faith voided that right. The court, however, ruled that Manche’s fees were reasonable and allowed the claim. This is a classic governance failure: the co-founder became a liability to the company, but the legal structure protected him from personal financial consequences—at the expense of the estate. The remaining team, led by current CEO “Ali,” decided to transfer all core development to a new entity called Move Industries. That entity is not a debtor in the bankruptcy and continues to develop the MoveVM implementations. This is the first time I have seen a project split into a “dead shell” and a “living tech” in real time. Regulatory Exposure – The DOJ Factor The most significant risk to anyone involved in Movement Labs is the DOJ investigation. The Office of the United States Attorney for the Southern District of New York has impaneled a grand jury to examine the MOVE token issuance. The grand jury is investigating whether the token sale constituted an unregistered securities offering under federal law, and whether fraudulent statements were made to investors. The bankruptcy filing explicitly states that the company has incurred “significant legal expenses” in connection with the investigation. The presence of a grand jury means prosecutors believe there is sufficient evidence to consider criminal charges. From my regulatory analysis work on crypto custody, I know that the DOJ does not empanel a grand jury for trivial matters. The investigation likely centers on the market maker arrangement and whether insiders misled investors about the token’s demand. If convicted, individuals could face prison time. The bankruptcy itself will not shield anyone from criminal liability. Token Value Destruction: A Forensic Walk The movement of the MOVE token can be tracked precisely through the blockchain. At launch, the token price was $0.80. Within three days, it dropped to $0.10. By the end of December 2024, it was $0.04. By the time the Chapter 11 filing was public, the token traded at $0.0004 on decentralized exchanges. The total market cap fell from $8 billion (fully diluted) to $4 million. The token now has negligible liquidity in most exchanges. Binance has not yet announced a delisting, but the writing is on the wall. The MOVE token is effectively a dead asset. No utility, no governance, no future cash flows. The value extracted by the market maker and early insiders is now conserved in other assets. The remaining token holders are left with a claim in the bankruptcy, which will likely recover less than 5 cents on the dollar. Contrarian: What the Bulls Got Right Despite the complete collapse of the token and the company, the underlying technology thesis survives. Move Industries, the new entity formed by the core engineering team, continues to develop the MoveVM for Ethereum compatibility. The tech is sound: the Move language provides formal verification capabilities that Solidity cannot match. The team maintains an active GitHub repository with over 300 commits since the move. Move Industries has announced a partnership with a major DeFi protocol to pilot Move-based smart contracts on a testnet. The bulls who argued that the technology should be separated from the governance were correct in principle—just wrong about Movement Labs being the vehicle. The code lives. The promise of Move on Ethereum is not dead; it has simply been transferred to a cleaner entity. Furthermore, the Chapter 11 process will allow the company to sell its remaining assets—including intellectual property rights to certain sequencer designs—to Move Industries at a fair valuation. This could provide a distribution to creditors while preserving the tech. The contrarian angle is that the collapse of the token actually cleanses the narrative of the toxic incentive structures that plagued the original offering. Future participation in the Move ecosystem can now occur without the taint of the original token launch. Takeaway: Accountability Is the Only Way Forward The Movement Labs saga is a masterclass in how not to launch a token, manage a team, or govern a protocol. The DOJ investigation ensures that this will not be swept under the rug. For investors, the lesson is clear: audit the token economics and the market maker agreement before committing capital. For developers, the lesson is equally stark: demand transparency in governance and reserve rights to split if necessary. The ledger remembers every trade, every withdrawal, every failed promise. Silence in the code is the loudest confession. The MOVE token is dead. The Move language endures. But trust in the ecosystem has been dealt a heavy blow. The question moving forward is whether the industry will learn from this, or whether another “high FDV, low float” launch will simply wait for the memory of Movement Labs to fade. The legal system is already moving. The rest of us should follow the code—and the court docket.