Movement Labs Suspends Co-founder Rushi Manche After a Deal He Facilitated Caused Controversy

Amid the turbulence in the MOVE token price, Movement Labs has taken action by suspending its co-founder and a third-party is now investigating the matter.

Coinbase has delisted the MOVE token after a deal, which is now subject to an independent review, led to the suspension of Rushi Manche, a co-founder of Movement Labs.

The move follows the crypto exchange's decision to delist another token, IXT, in August, after an executive at a major blockchain venture firm penned an op-ed suggesting that market makers could be mishandling new listings.

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

The third-party probe follows a deal Manche facilitated with Rentech—who helped finalize terms with market maker Web3Port—that prompted the Foundation to suspend him.

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

The deal came shortly after Web3Port reportedly sold the 66 million MOVE tokens it received, roughly 5% of the total issuance.

In December 2024, the sale resulted in $38 million in price pressure. Groom Lake has refrained from any comments on the ongoing investigation.

Recent analysis indicates that having the right market maker can propel a cryptocurrency project forward by providing crucial liquidity and securing listings on major exchanges to ensure the project’s tokens are readily tradable.

Conversely, if market makers are driven by the wrong incentives, they can effectively stall a project’s progress from the outset.

The summer 2024 report suggested that up to 78% of new token listings since April 2024 have been mishandled, with market makers being implicated.

Meanwhile, creditors of the now-bankrupt Celsius Network have suggested that Wintermute, a significant market maker in crypto, was involved in wash trading the Celsius token.

This deceptive practice inflates an asset’s trading volume to appear far greater than the actual activity.

Moreover, instances like this have surfaced before. Fracture Labs, the developers of Decimated, filed a lawsuit against Jump Crypto in late 2024, accusing the market maker of manipulating the DIO token in a pump-and-dump scheme.

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

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

In a ruling last month, a Massachusetts court imposed a fine on CLS Global for its role in fraudulent trading volume manipulation.

The founder of Gotbit, 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, blockchain project Movement, the entity behind the MOVE cryptocurrency, announced it was investigating potential misinformation that led them into a financial agreement granting a single entity excessive influence over the token’s market.

Following the December 9 debut of MOVE on exchanges, this deal saw one party sell 66 million tokens the next day. The 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, initially designated for Web3Port, were channeled 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.

In an internal memo, the Movement Foundation detailed how the contract with Rentech saw nearly half of the total MOVE tokens available to the public being loaned to a single counterparty. This granted that entity an extraordinary level of control over the new token.

Even more concerning, 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’s 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 guide negotiations and benefit from its position as a middleman.

The partnership with R