Movement Labs Suspends Co-Founder Amid 66M Token Dump Controversy

Movement Labs, a prominent Ethereum layer-2 startup, has suspended its co-founder, Rushi Manche, amidst a significant governance probe and a controversial token dump. The company announced the suspension, citing ongoing events and a third-party review conducted by Groom lake regarding organizational governance and recent incidents involving a market maker.

The controversy began when Movement Labs entered a market-making deal with rentech, a shell company that claimed to be a subsidiary of a firm. However, Rentech allegedly misrepresented its role and dumped its entire allocation of 66 million MOVE tokens within 24 hours of the token's launch. This action sparked internal and public backlash, leading to the suspension of Manche, who was reportedly involved in forwarding the Rentech deal despite legal concerns and conflict warnings.

Internal documents revealed that Rentech appeared on both sides of the agreement, once as a representative of the firm and again as an agent acting on behalf of the Movement Foundation. Legal counsel for the Movement Foundation had flagged the Rentech contract as deeply problematic, but the deal was approved nonetheless. Within 24 hours of the MOVE token's debut on December 9, the 66 million tokens were sold into the open market.

The third-party governance audit, conducted by Groom Lake, is currently probing Manche's role in pushing the deal through. In late March, Binance announced it had offboarded the market maker responsible for the MOVE dump, citing misconduct, and froze the $38 million it had profited from the dump. The exchange accused the firm of flooding its platform with sell orders while placing minimal buy support, creating an artificially thin market. Movement Labs responded to Binance’s allegations, stating that the dump happened against their wishes and in breach of their agreement.

The fallout deepened when a crypto exchange announced it would suspend MOVE trading on May 15, citing a routine asset review. Following the announcement, the MOVE token experienced a significant drop in value, plunging to its lowest ever recorded price. Inside the project’s community group, a moderator confirmed Manche’s suspension and urged the community to await the outcome of the audit, emphasizing that the Foundation had commissioned a third-party investigation to understand the events more clearly.

As Movement Labs navigates this turbulent period, the outcome of the third-party audit will be pivotal in defining its governance structure and restoring trust among investors. The suspension of Rushi Manche signals a commitment to accountability, though larger questions remain about the integrity of operational agreements and future token management. Stakeholders will be watching closely as the situation develops, hoping for a turnaround that may restore confidence in both the organization and the MOVE token.

Ask Aime: What's behind Movement Labs' co-founder Rushi Manche's suspension?