Movement Labs suspends co-founder amid MOVE market crisis

Amid the turbulence in the MOVE token price, Movement Labs has taken action by suspending its co-founder.

Movement Labs suspended Rushi Manche, a co-founder, after a deal he facilitated caused controversy, triggered an independent review, and led Coinbase to delist MOVE.

On May 2, Movement used X to confirm Manche’s suspension, saying the “decision was made in light of ongoing events.”

A third-party probe into a deal Manche struck with Rentech—who helped finalize terms with market maker Web3Port—prompted Movement Labs to suspend him, as announced by the Foundation.

Groom Lake, a firm specializing in private intelligence, is conducting the investigation.

The deal soon followed Web3Port’s reported sale of the 66 million MOVE tokens it received, which equals around 5% of the total issuance.

In December 2024, the sale triggered a $38 million drop in price pressure. Groom Lake has withheld any statements on the ongoing investigation.

Recent analysis reveals that the right market maker can accelerate a cryptocurrency project by supplying essential liquidity and securing listings on major exchanges to ensure it can be traded.

If market makers are motivated by the wrong incentives, they can effectively halt a project’s progress at its initial phase.

According to the summer 2024 report, up to 78% of new token listings since April 2024 have been mishandled, with market makers suggested as a potential cause.

Meanwhile, the creditors of Celsius Network, now bankrupt, have suggested that Wintermute, a major market maker in crypto, played a role in wash trading the Celsius token.

Wash trading is a deceptive practice that makes an asset’s trading volume appear significantly higher than its actual activity.

Additionally, cases like this have occurred before. Fracture Labs, developers of Decimated, sued Jump Crypto in late 2024, accusing the market maker of manipulating the DIO token in a pump-and-dump scheme.

According to a Wall Street Journal report, DWF Labs, a major Binance client, is accused of engaging in market manipulation, wash trading, and inflating trading volumes to the tune of $300 million through transactions with crypto projects.

Both DWF Labs and Binance refuted the claim in May 2024.

In a ruling last month, a Massachusetts court fined CLS Global for its involvement in fraudulent trading volume manipulation.

Gotbit’s founder, from a crypto hedge fund and market maker, was extradited from Portugal to the United States in late February. He now faces accusations of market manipulation and conspiracy to commit wire fraud.

In April, reports emerged that the blockchain project Movement, which supports the MOVE cryptocurrency, was investigating potential misinformation that led it into a financial agreement conferring excessive influence over the token’s market to a single entity.

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After MOVE debuted on exchanges on December 9, this deal resulted in one party selling 66 million tokens the following day. This action sharply drove down the price and sparked allegations of insider trading within a crypto project backed by World Liberty Financial, a venture linked to Donald Trump.

On April 21, Cooper Scanlon, co-founder of Movement Labs, informed employees via Slack that the company was examining the routing of more than 5% of MOVE tokens. These tokens, originally designated for Web3Port, were funneled through a middleman named Rentech – “an entity the foundation was led to believe was a subsidiary of Web3Port but apparently it is not.” Rentech has denied making any false claims.

The Movement Foundation, in an internal memo, outlined how the contract with Rentech loaned about 50% of MOVE’s publicly available supply to one counterparty. This effectively granted that entity extraordinary control over the new token.

More worryingly, Zaki Manian, a veteran crypto founder who reviewed the documents, concluded that “there are incentives basically to manipulate the price to over $5billion fully diluted value and then dump on retail for shared profits,”  “Even participating in a discussion where that’s on paper is insane,” he said.

New token projects rely on market makers to provide liquidity and stabilize prices by injecting capital for trading on exchanges. However, this setup isn’t without its risks—insiders can manipulate the market and secretly dump sizable token holdings.

In the market-making contracts under review, Rentech appeared on both sides of its agreement with the Movement Foundation. It acted as the foundation’s agent while also claiming affiliation with Web3Port. This dual role may have allowed Rentech to steer negotiations and profit from its position as a middleman.

The partnership with Rentech enabled wallets associated with Web3Port, a Chinese financial group claiming connections to MyShell, GoPlus Security, and the Trump-linked World Liberty Financial to sell $38 million worth of MOVE tokens just one day after their exchange listing.