Movement Labs suspends co-founder Rushi Manche after market manipulation scandal

The company confirmed the suspension in a statement and cited “ongoing events” and a third-party review by Groom Lake related to organizational governance and relationship

Movement Labs has suspended co-founder Rushi Manche following a string of challenges that impacted the project. The company confirmed the suspension in a statement.

This follows a third-party review by Groom Lake regarding organizational governance and recent incidents involving a market maker. The review was commissioned by Movement Labs earlier this year.

The company is also handling the fallout from a MOVE token dump that resulted in Coinbase delisting the token.

The origin of Movement Labs’ latest challenges can be traced back to December. This was when a market maker allegedly sold 66 million MOVE tokens and took home an estimated $38 million in USDT profit.

The issue was found out in March when Binance detected unusual activity, froze the funds in question and reported the issue to the Movement Foundation and to Movement Labs.

Coinbase resolved to delist the token after it initiated limited trading for MOVE. The exchange announced that the token failed to meet its listing requirements.

The MOVE token has also suffered from the incident impacting the cryptocurrency market, with a 20% loss in the last 24 hours and a 50% loss in the last 30 days. The downward trend represents a long-term erosion of investor confidence as a result of the scandal.

To limit the damage, the Movement Foundation announced that it had terminated its relationship with the implicated market maker. It also stated that it would initiate a USDT buyback for 38 million from a new reserve.

However, the residual effects of the market maker scandal are evident in Manche’s suspension and Coinbase’s delisting.

This will be assessed by Groom Lake, which is conducting an independent investigation to determine the level of internal involvement in the incident.

The results of this investigation will be crucial for the project’s future, as they will clarify the extent of any internal knowledge or participation in the token dump that occurred in December.

The review comes at a critical time as the project faces both regulatory scrutiny and declining market confidence.

The relationship between Movement Labs, the Movement Foundation, and Rentech remains under particular focus. The leaked contracts suggesting Rentech controlled a substantial portion of the token supply raise questions about due diligence and oversight within the project’s management structure.

Rushi Manche’s suspension as co-founder appears to be a precautionary measure while the investigation proceeds, though the company has not specified whether he is suspected of direct involvement or oversight failures. The temporary removal of a founding team member signals the seriousness with which the organization is approaching the allegations.