Movement Labs Faces Major Setbacks After Market-Making Scandal Involving Its MOVE Token

Movement Labs, a blockchain startup, has faced major setbacks. The startup focused on modular execution layers has fallen into controversy

Movement Labs, a blockchain startup focusing on modular execution layers, has been implicated in a major setback with the suspension of its co-founder, Rushi Mache, amid a market-making scandal involving its MOVE token.

Coinbase Delisting and MOVE’s Price Plunge

The spotlight fell on Movement Labs after Coinbase announced the delisting of the MOVE token, citing non-compliance with the listing standards. While not explicitly mentioning market manipulation, Coinbase had previously placed the token in limit-only mode on May 1, highlighting growing concerns about its volatility and the integrity of its market.

This move followed an incident in December 2024, where a market maker allegedly sold 66 million MOVE tokens for an estimated $38 million in profits. The market token dump caused the price to drop instantly and fall to very low levels, sparking accusations of insider trading and market speculation.

The controversial situation arose as the market maker, reportedly linked to Wev3Port, was found to have sold a massive portion of the MOVE supply. According to some reports, the firm responsible for the sale controlled more than 5% of the total token supply and was involved in inflating the MOVE’s valuation before the planned sell-off.

This action brought concerns regarding Movement Labs’ governance and the transparency of its tokenomics. However, despite the allegations, Movement Labs acted swiftly, suspending its co-founder and engaging a third-party review.

The digital asset risk and compliance firm, Groom Lake, is leading the investigation, focusing on examining the market, the market maker’s deals, the token distribution, and internal communication within Movement Labs.

“We can confirm that Rushi Mache has been suspended from Movement Labs. This decision follows recent events and the third-party review by Groom Lake is ongoing. The scope of the review includes organizational governance and recent incidents related to a market maker,” a Movement Labs spokesperson told Decrypt.

The Growing Fallout from the Scandal

As the scandal unfolded, its ramifications extended beyond just the company. The delisting of MOVE from Coinbase, one of the largest crypto exchange platforms globally, had a significant impact.

This move sparked a 14% drop in the MOVE token price earlier today as Coinbase announced the delisting, which ultimately depends on the company’s listing standards. This decision came after Coinbase placed the token in limit-only mode on May 1, shifting away from the standard market mode.

The change in trading mode was related to the market maker’s actions and the subsequent price fluctuations that followed. A crypto news outlet, Wu Blockchain, pointed out that the market maker, allegedly linked to Wev3Port, sold 66 million MOVE tokens for $0.58, ultimately making a profit of $38 million.

This action brought concerns regarding Movement Labs’ governance and the transparency of its tokenomics. However, despite the allegations, Movement Labs acted swiftly, suspending its co-founder and engaging a third-party review.

The digital asset risk and compliance firm, Groom Lake, is leading the investigation, focusing on examining the market, the market maker’s deals, the token distribution, and internal communication within Movement Labs.

“We can confirm that Rushi Mache has been suspended from Movement Labs. This decision follows recent events and the third-party review by Groom Lake is ongoing. The scope of the review includes organizational governance and recent incidents related to a market maker,” a Movement Labs spokesperson told Decrypt.

The Importance of Governance and Transparency

The ongoing investigation into Movement Labs’ role in the scandal highlights the need for better governance and transparency in the crypto world. A market maker can either bolster the success of a token or destroy it, depending on the incentives. When market makers manipulate token supply and price, it not only undermines the integrity of the project but also impacts and erodes the investors’ trust.

Movement Labs’ reputation is now dependent on the third-party investigation and the actions taken to address the scandal. Investors, partners, and regulators are closely watching how the company handles this crisis. Only the outcomes may serve as a benchmark for other Web 3 and blockchain startups.