Movement Labs Files for Bankruptcy as Its Fired Co-Founder Tops Creditors

Movement Labs filed for Chapter 11 bankruptcy in Delaware last week, listing under $500,000 in assets against liabilities that could reach $10 million. The startup built the Move blockchain and its MOVE token. Both survived a yearlong scandal. The company didn’t.

The bankruptcy’s creditor list carries a twist. Rushi Manche, the co-founder Movement Labs fired last year over an undisclosed market-making deal, is listed as the estate’s largest creditor. He’s owed more than $1.6 million, a sum bigger than everything the company says it owns.

Assets Below Half a Million Dollars

Movement Labs, whose legal filer name is MVMT Labs Inc., submitted its Chapter 11 petition in the U.S. Bankruptcy Court for the District of Delaware. The filing is dated July 15 and only became public knowledge on July 21, 2026.

The company reported assets between $100,000 and $500,000, against liabilities of up to $10 million. It listed as many as 299 creditors, according to The Block’s review of the filing.

• Rushi Manche – the fired co-founder, holding the largest unsecured claim at more than $1.6 million
• Delaware Division of Revenue – the state’s own tax authority
• Anchorage Digital – a federally chartered crypto custody bank

It’s a small filing in dollar terms. It isn’t the company’s only legal fight this year.

Rushi Manche Tops the Creditor List He Once Ran

Manche co-founded Movement Labs in 2022 and ran it as chief executive until last year. The board fired him in 2025 after an internal investigation into a market-making agreement he had brokered without full disclosure.

He didn’t leave empty-handed. Manche kept a 34.25% equity stake in Movement Labs even after his termination. His $1.6 million unsecured claim, per the bankruptcy filing, outranks every other creditor, including the state of Delaware and crypto custodian Anchorage Digital.

He’d already taken the company to court once before the bankruptcy. In July 2025, Manche sued Movement Labs in Delaware’s Court of Chancery, seeking a declaratory judgment over his rights as a shareholder and former officer. The case, Manche v. Mvmt Labs Inc., sits before Chancellor Paul A. Fioravanti Jr., with Manche represented by Ballard Spahr attorney David J. Margules.

A $38 Million Sell-Off, One Day After Launch

MOVE, the network’s native token, launched on major exchanges in December 2024. A market maker sold roughly 66 million MOVE tokens, about 5% of supply, into thin buy orders one day later, netting a $38 million profit and crashing the price.

Binance called the conduct a violation of its market-making rules. It banned the firm and froze the profits, saying it would use them to compensate affected users. Coinbase suspended MOVE trading separately, citing the token’s failure to meet its listing standards.

An April 2025 CoinDesk investigation traced the arrangement back to Manche, who had brokered it through an intermediary called Rentech linked to market maker Web3Port, without disclosing it to Movement Labs’ board. The company suspended him pending a governance review by outside investigator Groom Lake, a decision it confirmed in a post on X. The board terminated him days later.

Separately, Movement Labs had faced allegations that it promised 10% of MOVE’s token supply to early insiders, a claim that contributed to an earlier slide in the token’s price.

The market maker’s $38 million profit almost exactly matched the sum Movement Labs raised in its own Series A twenty months earlier.

1. September 2023: Movement Labs raises a $3.4 million pre-seed round.
2. April 2024: The startup closes its $38 million Series A, led by Polychain Capital.
3. December 2024: The MOVE token launches on major exchanges.
4. December 10, 2024: A market maker dumps 66 million MOVE tokens a day after listing.
5. March 18, 2025: Binance bans the market maker and freezes its profits.
6. May 2025: Movement Labs suspends, then fires, Rushi Manche.
7. July 9, 2025: Manche sues Movement Labs in Delaware’s Court of Chancery.
8. July 15, 2026: MVMT Labs Inc. files for Chapter 11 bankruptcy.

Everything since has run against the company that built Move, even as the token and its new operator carried on without it.

Move Industries Says It Is a Separate Company

Torab Torabi, chief executive of Move Industries, addressed the bankruptcy directly on X. He said the two companies are distinct legal entities, and that the Chapter 11 filing does not touch his company’s operations.

Move Industries is operating normally. We continue to put our heads down and build.

Torabi posted the statement as Move Industries continues developing the Movement Network, which pivoted last year from an Ethereum layer-2 (a network that processes transactions off Ethereum’s main chain before settling back to it) into an independent layer-1 blockchain that settles its own transactions.

In June 2026, Move Industries said it had secured licensed payment rails across the U.S., Canada and the European Union, repositioning Movement as a stablecoin settlement layer for emerging markets rather than another Ethereum scaling network chasing the same developers.

The Movement Network Foundation, a third entity separate from both companies, has continued running MOVE buyback programs since the scandal, funded partly by the market maker’s frozen proceeds.

What Movement Raised Versus What Is Left

Movement Labs never disclosed a valuation when it closed a $38 million Series A round in April 2024, on the heels of a $3.4 million pre-seed round the year before. By January 2025, it was reportedly in talks for a new round that would have valued the company near $3 billion, crypto.news reported at the time. Whether that round closed at that price was never confirmed.

Nineteen months later, what’s left fits on a small business bankruptcy form.

The distance between what Movement Labs once hoped to be worth and what it says it owns today measures how far the project fell.

What Happens to MOVE Token Holders Now?

MOVE keeps trading normally. The bankruptcy applies only to MVMT Labs Inc., not to Move Industries or the Movement Network Foundation, which now run the blockchain and its token treasury. Holders have no formal claim in the Chapter 11 case, though the filing leaves open who ultimately controls what’s left of the brand.

MOVE traded at $0.0108 on Tuesday, up less than 1% on the day, according to TradingView data, barely reacting to bankruptcy news that would rattle most tokens. It had already absorbed the worst of the damage. MOVE traded near $0.546 in March 2025, when Binance froze the market maker’s profits, and has lost most of that value since.

What isn’t resolved is Manche’s Chancery Court case, still pending a year after he filed it, or whether his equity stake and creditor claim will eventually be paid out of an estate that says it has next to nothing left to give.

Frequently Asked Questions

What is Move Industries and how does it differ from Movement Labs?

Move Industries is the entity that took over core development of the Movement blockchain after the scandal, led by chief executive Torab Torabi. It also holds a stake in real-world-asset yield platform Zoth as part of its push into stablecoin settlement products, and it says it was not named in Movement Labs’ bankruptcy filing.

Who is Rushi Manche?

Manche co-founded Movement Labs in 2022 with fellow Vanderbilt University dropout Cooper Scanlon and led the company as chief executive through its $38 million Series A round before the board fired him in 2025 over an undisclosed market-making deal.

Does Movement Labs’ bankruptcy affect MOVE token holders directly?

Not directly. Bankruptcy claims are resolved through the debtor’s estate, and MVMT Labs Inc.’s disclosed asset base of under $500,000 leaves little for its listed creditors, let alone token holders, who hold no formal claim on the estate to begin with.

What happens next in Manche’s lawsuit against Movement Labs?

Chapter 11 filings typically pause pending lawsuits against the debtor through an automatic stay. That could shift Manche’s Chancery Court fight over his shareholder rights into the bankruptcy claims process alongside Delaware’s Division of Revenue and Anchorage Digital.

Disclaimer: This article is for informational purposes only and does not constitute investment, legal or financial advice; cryptocurrency prices are volatile, and readers should consult a licensed professional before acting, with figures accurate as of July 22, 2026.