Bankruptcy of Movement Labs: A Detailed Analysis of the Crisis and Its Consequences for the MOVE Ecosystem
On July 15, MVMT Labs, widely known as Movement Labs, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The case is being heard in the Delaware District Court. According to the documents, the company listed between 200 and 999 creditors, estimating its assets in the range of $100,001–500,000 and liabilities from $1 to 10 million. The reorganization plan must be submitted by October 13.
On July 20, the court approved the retention of bank accounts and the existing cash management system. Additionally, the company received preliminary approval for DIP financing (debtor-in-possession financing). The creditor under this scheme is MNF DIP SPV Ltd., which filed a notice of participation in the case on the day Movement Labs filed for court. Creditor claims are accepted until September 14, and the next court hearing is scheduled for August 27.
Move Industries CEO Torab Torabi hastened to reassure the community, emphasizing that the bankruptcy filing concerns solely MVMT Labs. Move Industries, he stated, is a separate legal entity and continues to operate normally. As a reminder, in December 2025, Move Industries became the primary service provider for the Movement Network Foundation, taking over the operational management of the ecosystem. Employees and key functions were transferred to the new structure.
Project Evolution: From L2 to an Independent Blockchain
Initially, the Movement Network was developed as a Layer 2 (L2) solution on Ethereum. However, by the end of 2025, the project completed its transition to its own Layer 1 blockchain, M1, with a unique consensus mechanism and staking of the MOVE token. The Movement Network Foundation retained its role as an independent ecosystem manager, while Move Industries is responsible for the network's development, operation, and growth.
Market Maker Scandal: The Root of the Problems
In April 2025, the Movement Labs team began investigating the circumstances of a deal with a market maker that led to the dump of 66 million MOVE and a sharp drop in the asset's price shortly after its listing. The intermediary Rentech received 66 million MOVE, representing 5% of the token's total supply. Binance blocked the market maker's account and froze 38 million USDT obtained from the sale of MOVE.
On May 2, Movement Labs suspended co-founder Rushi Manche pending an independent investigation, and on May 7, it terminated him, announcing a change in leadership. Starting May 15, Coinbase suspended MOVE trading after another review of the asset, noting that it regularly evaluates tokens for compliance with its listing standards.
My Analysis and Conclusions
The bankruptcy of MVMT Labs is not merely a technical process but the culmination of a series of managerial and market errors. The market maker scandal undermined trust in the project at an early stage, and the subsequent leadership change and delisting on key exchanges only worsened the situation. The transition to its own Layer 1 blockchain, while an ambitious step, could not compensate for the reputational losses. Now, the future of the MOVE ecosystem entirely depends on the ability of Move Industries and the Movement Network Foundation to restore trust among the community and investors, as well as on the successful reorganization of MVMT Labs. As a reminder, the genesis airdrop of the MOVE token occurred in December 2024, with a maximum supply of 10 billion MOVE, of which 22.5% entered circulation at launch. Investors should closely monitor developments, as the situation remains highly volatile.