Movement Labs Bankruptcy: $3B Valuation Crumbles as Fired Founder Tops Creditor List

Woofun AI reports that MVMT Labs, widely recognized as Movement Labs, has formally entered Chapter 11 bankruptcy proceedings, marking the abrupt end of a venture once valued at $3 billion. The entity, which operated within the Ethereum Layer 2 ecosystem and secured backing from Polychain Capital and Trump’s World Liberty Financial, now faces liquidation with a creditor list topped by its own ousted co-founder, Rushi Manche. This filing underscores a rapid descent from high-profile institutional support to financial insolvency.

The legal documentation submitted to the Delaware Bankruptcy Court on July 15, 2026, reveals a stark financial reality for the company. Assets are estimated to range between $100,000 and $500,000, while liabilities have accumulated to approximately $10 million. The filing identifies no more than 299 creditors, a figure that contrasts sharply with the scale of the company’s previous fundraising efforts. This disparity highlights the severity of the capital depletion that occurred during the final months of operation.

At the forefront of the creditor list is Rushi Manche, the co-founder who was terminated by the company. His unsecured claim exceeds $1.6 million, making him the single largest creditor in the bankruptcy estate. Despite his removal from leadership roles, Manche retains a 34.25% shareholding in the company. This structural irony—where the individual owed the most by the entity is the one who was expelled from it—defines the core conflict of the insolvency case.

Movement Labs was established in 2022 by two young entrepreneurs, Cooper Scanlon and Rushi Manche, both in their early twenties. The project’s technical foundation was built on the premise of integrating the Move language into the Ethereum ecosystem. Move originated from Meta’s discontinued stablecoin initiative, Diem, providing the project with a narrative of technological redemption. This origin story attracted early interest from investors seeking exposure to proven blockchain architectures.

Capital inflows accelerated rapidly following the project’s launch. In 2023, Movement Labs raised $3.4 million in its seed round. By April 2024, the company completed a Series A financing of $38 million, led by Polychain Capital, bringing total raised capital to approximately $41.4 million. In January 2025, Fortune reported that the firm was preparing for a $100 million Series B round at a valuation of $3 billion, signaling peak market confidence.

Political alignment further amplified the project’s visibility. World Liberty Financial, associated with Trump, purchased and publicly endorsed the MOVE token. During the period characterized as 'American on-chain revival,' Movement Labs aggregated multiple high-value narratives: Move language technology, Layer 2 infrastructure, institutional capital, and White House connections. On December 9, 2024, the MOVE token was listed on Binance, representing the zenith of its market presence.

The collapse commenced immediately following the listing. On the day after the Binance listing, wallets linked to market maker Web3Port executed sales of 66 million MOVE tokens, representing approximately 5% of the total supply. These transactions generated roughly $38 million in cash proceeds. The sudden influx of sell pressure caused the token price to plummet, initiating a downward spiral that would ultimately lead to the company’s demise.

Woofun AI data shows that an investigation in April 2025 uncovered the structural flaws behind the token dump. The tokens flowed through an intermediary entity named Rentech, which had no prior digital footprint. Contract documents revealed that Rentech acted as an agent for the Movement Foundation on one side of the transaction and as a subsidiary of Web3Port on the other. This dual role allowed the same entity to facilitate the sale on both sides of the negotiation.

The Movement Foundation’s legal advisor described the agreement as "probably the worst agreement ever seen," yet the contract was executed. A critical clause stipulated that if the value of MOVE reached $5 billion, Web3Port could liquidate the tokens, with profits split 50-50 between the market maker and the foundation. Analysts interpreted this provision as a mechanism for price manipulation, effectively embedding profit-sharing from a dump into the legal framework. Reports indicated that Singaporean financier Galen Law-Kun was behind Rentech, although Rentech denied any false statements.

The scandal triggered a chain reaction of delistings and legal actions. Binance banned the accounts of the involved market makers. Coinbase suspended MOVE trading on May 15, 2025, citing failure to meet listing criteria. In response, the foundation severed ties with Rentech and launched a $38 million USDT buyback plan to stabilize the market. The symmetry of dumping $38 million and buying back $38 million highlighted the inefficiency of the crisis management.

Personnel changes followed the market turmoil. Manche was suspended and then fired, with the company accusing him of signing undisclosed agreements. In retaliation, Manche filed a lawsuit against his former employer in the Delaware Chancery Court in July 2025. He successfully obtained payment for legal fees related to a grand jury investigation by the DOJ regarding the MOVE token. This $1.6 million claim likely stems from these legal costs, which became the largest item in the bankruptcy documents.

Core development responsibilities were transferred to a new entity, Move Industries, led by Torab Torabi. The project’s strategic focus shifted from "Ethereum L2" to a sovereign L1 platform targeting cross-border payments and stablecoin settlements in emerging markets. The company claimed to have secured access to licensed payment infrastructure in the United States, Canada, and the EU. This pivot aimed to distance the technology from the failed financial model of the original entity.

Despite the strategic repositioning, the capital market did not respond favorably. After the bankruptcy news broke, the price of MOVE hovered around $0.0108, a near-total loss of value compared to its listing price. Torabi emphasized on X that Move Industries and the bankrupt MVMT Labs were separate legal entities, asserting that blockchain development and operations continued normally. This separation tactic is common in the industry, allowing the technology to persist even as the corporate structure fails.

The timeline of the collapse reveals the speed of the downfall. From the Binance listing to the market maker dump, only one day elapsed. From the scandal breaking to Manche’s suspension, approximately one week passed. From its status as a star project to filing for bankruptcy, the process took 19 months. The crypto market’s ability to destroy value matches its capacity to create it, often without external hacks or rug pulls.

The bankruptcy process will handle assets worth less than $500,000, but the unresolved issues remain significant. The collapse was driven by internal contracts signed by the company itself, despite legal advisors identifying them as problematic. The industry has developed robust security systems for external attacks, but lacks auditing tools for internal contractual risks. The question remains: which other star projects are currently negotiating similar agreements with intermediaries like Rentech?