MVMT Labs Inc., the Ethereum Layer 2 developer behind Movement Labs, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on July 15. The case number is 26-11113. The company is using Subchapter V, a restructuring process designed for small businesses, which allows it to keep operating while reorganizing under court supervision. Creditors must file their claims by Sept. 14.
Co-founder left after market-making contract controversy
Court documents and related reporting say the company’s operating trouble grew out of a dispute over a market-making agreement following the launch of its token. In May last year, Movement Labs suspended co-founder Rushi Manche. The matter involved a trading contract linked to Web3Port and led to 66 million MOVE tokens, or 5% of total supply, being sold into the market. Those tokens were worth about $38 million, and the sale was followed by an immediate price decline. After the incident, Coinbase suspended trading of MOVE, and Binance froze the account involved.
Problems for Movement began not long after the MOVE token launch in 2024. In a report published in April last year, CoinDesk said Movement was investigating whether it had been misled into signing a market-making agreement. According to that report, the deal gave a rival too much power and had a major effect on MOVE’s circulating supply. Internal documents reviewed by CoinDesk showed that the agreement allowed roughly 66 million MOVE tokens to be sold into the market one day after issuance, sending the token price sharply up and down.
Those documents centered on a company called Rentech. The report said Rentech was an intermediary that appeared in contracts tied to the Chinese market maker Web3Port. Rentech denied any wrongdoing or false statements.
Filing shows assets, liabilities and creditor count
Court records show that Movement Labs listed assets of between $100,001 and $1 million, with liabilities between $1 million and $10 million. The number of creditors was listed at 200 to 999.
Major creditors include co-founder Rushi Manche, the Delaware tax authority and crypto custody firm Anchorage Digital. The court has scheduled a creditors’ meeting for Aug. 20, and claims must be filed by Sept. 14.
Restructuring applies only to Movement Labs
Move Industries CEO Torab Torabi said the team separated operations last year and took over development of the Movement ecosystem in December. He said the bankruptcy process applies only to Movement Labs itself.
Before seeking bankruptcy protection, Movement Labs had already changed its business direction in June. The company stopped competing directly with traditional Ethereum scaling networks and shifted its focus to cross-border payments, remittances and stablecoin settlement, while seeking legal payment infrastructure approvals in the United States, Canada and the European Union.
MOVE remains about 99% below its all-time high
CoinGecko data cited in the source material shows that as of July 21, MOVE was trading at about $0.0108. The token was flat over the previous 24 hours and down about 8% over the past month. Its market capitalization stood at about $45 million, ranking around No. 474 globally. Compared with its all-time high of $1.45 on Dec. 10, 2024, MOVE was down about 99%.
DeFiLlama data shows the Movement network had about $133 million in total value locked.