Movement Labs Files for Chapter 11 Bankruptcy Protection
Movement Labs (MVMT) filed for Chapter 11 bankruptcy protection in Delaware earlier this month, with assets between $100,000 and $500,000, liabilities up to $10 million, and nearly 299 creditors.
The largest unsecured creditor is co-founder Rushikesh Manche, who was removed from his position, with a claim exceeding $1.6 million, and he still holds 34.25% equity.
The company previously raised $38 million in Series A funding led by Polychain and is the core developer of the Ethereum Layer 2 Movement Network. The MOVE token collapsed after its issuance in December 2024 due to market maker sell-offs.
Following an internal investigation, Manche was dismissed, and development has shifted to Move Industries. The bankruptcy liquidation marks the final chapter of the token scandal, with significant evaporation of top venture capital funds.
Source: Public Information
ABAB AI Insight
Rushikesh Manche, co-founder of Movement Labs, was dismissed by the board in May 2025 due to controversies surrounding the market-making arrangements for the MOVE token, following an internal investigation that pointed to his involvement in secret contracts, leading Rentech to control the sale of 66 million tokens.
In terms of capital flow, the $38 million funding was primarily used for the development of Move language Layer 2 and ecosystem expansion, but after the token issuance crisis, funds were rapidly consumed through legal litigation, investigation costs, and creditor claims. Manche subsequently founded Nyx Group, planning to deploy $100 million to support new projects.
Similar to multiple cases in 2022-2023 where founders of crypto projects exited due to token distribution disputes (such as some early Solana ecosystem projects), Movement is currently in the liquidation phase after failing to transition from Layer 2 development to an independent Layer 1.
This essentially represents a reversal of capital concentration: high-valuation financing relies on governance trust, and once internal power struggles and opaque market-making are exposed, pricing power swiftly shifts to creditors and market sell pressure, stemming from the agent risk out of control due to the high binding of founder equity and token incentives in crypto projects.
ABAB News · Law of Cognition
- Financing is easy, liquidation is hard; once trust collapses, capital never returns.
- Founder equity retention is often the biggest concern for creditors, rather than the assets themselves.
- Governance should be scrutinized before token issuance, and liquidation should be examined afterward; structural loopholes will eventually reveal themselves.