Written by: Xiaobing

On July 15, 2026, a Chapter 11 application was received by the bankruptcy court in Delaware. The applicant MVMT Labs, or Movement Labs, a former Ethereum Layer 2 star project backed by Polychain, which also had the Trump family's World Liberty Financial involved, was said to be preparing for a $100 million Series B funding round with a $3 billion valuation.

The bankruptcy documents reveal that the company's current assets are between $100,000 and $500,000, with liabilities as high as $10 million and fewer than 299 creditors.

At the top of the creditor list is co-founder Rushi Manche, who was dismissed by the company, with unsecured debts exceeding $1.6 million. He also holds 34.25% equity in the company.

When a company goes into bankruptcy, the person owed the most is the founder who was pushed out.

The ability of the crypto industry to write absurd scripts surpasses all screenwriters once again.

How glorious it once was

Movement Labs was founded in 2022, and its two founders, Cooper Scanlon and Rushi Manche, are both in their early twenties. The project's technical narrative is quite appealing: bringing the Move language into the Ethereum ecosystem. The Move language originates from Meta's failed stablecoin project Diem, carrying the arc of a "big company’s abandoned child making a comeback."

Capital quickly flowed in. In 2023, it secured $3.4 million in its seed round, and in April 2024 completed a $38 million Series A round, led by Polychain Capital, raising a total of approximately $41.4 million. In January 2025, Fortune reported that the company was preparing for a $100 million Series B funding round at a $3 billion valuation.

A larger endorsement came from politics. The Trump family's crypto project World Liberty Financial bought and publicly supported the MOVE token. During that narrative window of "American on-chain revival," Movement attracted nearly all the hot tags: Move language, L2, institutional capital, White House concepts.

On December 9, 2024, MOVE was listed on Binance, achieving its moment of glory.

The collapse began the very next day.

A "worst ever" agreement

The day after the listing, a wallet associated with the market maker Web3Port began to sell off 66 million MOVE tokens, approximately 5% of the total supply, cashing out about $38 million. The price of the token plummeted.

CoinDesk's investigation in April 2025 unveiled the inside story.

The circulation path of this batch of tokens passed through a previously unknown intermediary entity, Rentech. Contract documents indicated that Rentech played two roles in the same transaction: appearing as an agent of the Movement Foundation on one side and signing contracts under the name of a subsidiary of Web3Port on the other. The same company sitting on both sides of the negotiating table.

The foundation's legal advisor reviewed and commented that this "might be the worst agreement ever seen," yet the contract was signed without issue.

Additionally, there was a cleverly designed clause in the agreement: if the valuation of MOVE reached $5 billion, Web3Port could liquidate the tokens, splitting the profits 50-50 with the foundation. Analysts interpreted this directly: it was tantamount to writing "pump and dump" into the contract and making the project foundation a profit-sharing party in the subsequent crash.

According to reports from Cointelegraph and others, the mastermind behind Rentech is Singaporean financier Galen Law-Kun, who denied any false representations on Rentech's part.

Domino effect

After the scandal broke, every link in the chain began to fall one after another.

Binance banned the accounts of the involved market maker. Coinbase suspended MOVE trading on May 15, 2025, citing that the token no longer met listing standards. The foundation cut ties with Rentech, initiating a $38 million USDT buyback plan in an attempt to stabilize the market.

A $38 million crash and a $38 million buyback. The symmetry in numbers is almost ironic: the project used real cash to buy back the amounts cashed out by others during the crash.

A human resources upheaval followed. Manche was first suspended and then dismissed; the company accused him of signing undisclosed agreements. Manche's counterattack was equally fierce: in July 2025, he sued his former employer in Delaware Chancery Court and successfully obtained legal fees coverage related to the U.S. Department of Justice's grand jury investigation concerning the issuance of the MOVE token.

The $1.6 million debt claim likely stems from this. The legal fees obligation incurred by the company to fire him ultimately became a burden at the top of the bankruptcy filings.

Core development work was transferred to a new entity, Move Industries, led by Torab Torabi, shifting the project focus from "Ethereum L2" to sovereign L1, emphasizing cross-border payments and stablecoin settlements for emerging markets, claiming to have obtained licensed payment infrastructure access in the U.S., Canada, and the EU. This strategic adjustment sounds pragmatic, but the capital markets did not give a second chance.

Autopsy report

After the bankruptcy news broke, the MOVE price hovered around $0.0108. Compared to the price range at the beginning of its listing, the decline of this token needs to be described with the sense of "going to zero."

Torabi emphasized on X that Move Industries is a legally independent entity from the bankrupt MVMT Labs, and everything regarding chain development and operation is proceeding normally: "We continue to focus on building." This framing language is not unfamiliar in the crypto industry: the company is dead, but the chain is still alive; the equity has gone to zero, but the foundation is still there; the founders have left, and the narrative continues in a different shell.

Reviewing the entire case, the truly memorable details are hidden in the timeline.

It took one day from Binance listing to the market maker crashing the price;

about a week from the scandal breaking to the founder's suspension;

nineteen months from a star project to applying for bankruptcy.

The speed at which the crypto market destroys a project is as fast as the speed at which it elevates it.

This collapse had no hackers, no exit scams, and no lost private keys. What killed Movement was a contract signed by its own people, a contract reviewed by the legal team that was known to contain poison but still went into effect.

The industry has spent many years building a security system to defend against external attacks, yet has no auditing tools to tackle attacks stemming from signed agreements.

The bankruptcy process will deal with those assets worth less than $500,000. The real unresolvable issue left for the entire industry is: where is the next intermediary sitting in the conference room of a star project, ready to sign "the worst agreement ever?"