Movement Labs Files for Chapter 11 Bankruptcy Amid Lingering MOVE Token Fallout

Bankruptcy Filing Details

MVMT Labs, Inc. submitted its voluntary petition under Subchapter V on July 15, 2026, in the U.S. Bankruptcy Court for the District of Delaware. The streamlined process for small businesses allows the company to continue operations under court supervision while restructuring its debts.

Court records indicate assets ranging between $100,001 and $500,000, with liabilities estimated up to $10 million and creditors numbering as many as 299. The court has approved interim measures permitting the maintenance of bank accounts, cash management systems, and debtor-in-possession financing. Creditors have until September 14 to file claims.

Prominent Creditor Claims

The largest unsecured claim belongs to ousted co-founder Rushikesh “Rushi” Manche, exceeding $1.6 million. Despite his termination in May 2025, Manche retains a 34.25% equity stake in the company. Other notable claimants include the Delaware Division of Corporations, reportedly owed around $459,000, as well as Move Industries, Anchorage Digital, and security auditor OtterSec.

Roots of the Crisis: The MOVE Token Scandal

The bankruptcy stems from challenges following the December 2024 launch of the MOVE token on the Ethereum layer-2 network built using the Move programming language, originally developed by Meta. An investigation revealed a market-making agreement that allocated 66 million MOVE tokens—approximately 5% of total supply—to an intermediary linked to Web3Port.

These tokens were sold shortly after launch, generating significant downward price pressure estimated at $38 million. The arrangement drew scrutiny over potential conflicts, with Rentech appearing in contracts in dual roles. Binance banned the involved market-making account for misconduct and froze related profits, while Movement initiated a token buyback program and hired an external firm for review.

Leadership Changes and Operational Shift

In response to the controversy, Movement Labs suspended and later terminated co-founder Rushi Manche for his role in the undisclosed agreements. Core development and operations transitioned in December 2025 to the separate entity Move Industries, led by CEO Torab Torabi.

Move Industries has repositioned the Movement network as an independent layer-1 blockchain focused on stablecoin payments, cross-border transfers, and remittances, particularly targeting emerging markets. Torabi emphasized that the bankruptcy filing pertains solely to Movement Labs.

Token Performance and Market Impact

The MOVE token has experienced a steep decline, falling more than 94% over the past year to trade around $0.01. Major exchanges including Coinbase suspended trading after the token no longer met listing standards. The latest bankruptcy news contributed to the token reaching near all-time lows before showing modest fluctuations.

Prior to the difficulties, Movement Labs had secured substantial funding, including a $38 million Series A round led by Polychain Capital, with reports of interest in a larger round at a multi-billion dollar valuation.

The separation of entities ensures that ongoing blockchain development and ecosystem activities under Move Industries remain unaffected by the bankruptcy proceedings.