Movement Labs Files for Chapter 11 Bankruptcy Following Token Collapse and Market-Making Scandal

Movement Labs, the original blockchain developer behind the Ethereum layer-2 network Movement, has filed for Chapter 11 bankruptcy protection. The move follows a highly turbulent year for the project, which has been battered by a major market-making scandal, the suspension of a co-founder, and a near-total collapse in the value of its native token.

The petition was filed on July 15 in the US Bankruptcy Court for the District of Delaware. Movement Labs submitted the filing under Subchapter V, a specialized subsection of the U.S. bankruptcy code designed to offer a faster, more cost-effective restructuring process for small businesses. This designation allows the company to maintain its day-to-day operations under court supervision while it works to restructure its debts.

On Monday, the bankruptcy court granted several interim motions to keep the developer’s operations afloat. These approvals allow Movement Labs to maintain its existing bank accounts and cash management systems. Additionally, the court approved debtor-in-possession (DIP) financing, providing the company with the necessary liquidity to fund its ongoing operations during the restructuring process. Creditors have been given until September 14 to submit their claims against the company.

Following the court filing, Torab Torabi, the CEO of Move Industries, clarified on social media platform X that the bankruptcy proceedings are strictly limited to Movement Labs. Move Industries, which assumed full control of the development and operational management of the Movement ecosystem in December 2025, continues to operate normally and is unaffected by the filing.

The financial distress culminating in the bankruptcy stems from months of internal and external crises tied to the launch of the project’s MOVE token. The trouble began in earnest in May 2025, when Movement Labs suspended its co-founder, Rushi Manche, over a controversial market-making agreement he helped broker with Web3Port.

Under the terms of that agreement, Web3Port was allocated 66 million MOVE tokens, representing approximately 5% of the token’s total circulating supply. The market maker subsequently liquidated these holdings, unleashing an estimated $38 million in downward selling pressure on the open market. The massive sell-off triggered an independent investigation into the arrangement and severely damaged investor confidence.

The fallout from the token dump was swift. Later in May 2025, major cryptocurrency exchange Coinbase suspended trading of the MOVE token, citing a failure to meet its ongoing listing standards while the independent review into the market-making deal was underway.

These compounding crises precipitated a severe, long-term devaluation of the ecosystem’s native asset. Over the course of the past year, the MOVE token has shed more than 94% of its value, plummeting to a trading price of approximately $0.01.