Key Takeaways:
- Movement Labs filed for Chapter 11 bankruptcy on July 21, 2026.
- A market-making deal allowed 66 million MOVE tokens to be sold at launch.
- The company pivoted to cross-border payments in June before the filing.
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Movement Labs files for Chapter 11 bankruptcy after token scandal
Movement Labs filed for Chapter 11 bankruptcy on July 21, capping months of turmoil that included a token scandal, a Binance ban and a failed strategic pivot.
An internal investigation found that a market-making agreement allowed 66 million MOVE tokens to be sold into the market one day after the token debuted, according to documents reviewed by CoinDesk in April. The arrangement handed a single counterparty unusual influence over MOVE's circulating supply, contributing to a sharp decline in price.
The controversy centered on Rentech, an intermediary that appeared in contracts with Chinese market maker Web3Port. Binance later banned the market-making account involved for what it described as misconduct. Movement Labs launched a token buyback program and hired outside firm Groom Lake to review the events surrounding the deal. Co-founder Rushi Manche separated from the company in May.
The company attempted to pivot in June toward cross-border payments and stablecoin settlement, securing licensed payment infrastructure in the US, Canada and the European Union. The Chapter 11 filing leaves the future of those plans and the Movement blockchain network uncertain, though operations may continue during court-supervised restructuring.
Movement Labs built the Movement blockchain, an Ethereum layer-2 network using the Move programming language originally developed at Meta. The project launched with the goal of bringing Move-based smart contracts to Ethereum while offering faster and cheaper transactions. The MOVE token debuted in December 2025.
The bankruptcy filing follows a wider trend of consolidation in the Ethereum layer-2 sector, where competition among scaling networks has intensified and several projects have shifted toward real-world financial applications. Chapter 11 allows companies to continue operating while restructuring debts under court supervision.
This article is for informational purposes only and does not constitute investment advice.
