Movement Labs has suspended its co-founder, Rushi Manche, following a high-profile controversy involving the dumping of 66 million MOVE tokens.
The decision comes after a market-making agreement with Rentech resulted in a massive token sale just one day after the project’s launch.
The fallout has triggered an investigation, raised concerns about governance, and caused major exchanges to take action. This development raises serious questions about internal decision-making within one of Ethereum’s most closely watched projects.
Conflicts in Market-Making Deal Spark Investigation
The controversy began when Movement Foundation entered into a market-making agreement with Rentech.
The firm was presented as an affiliate of Web3Port, a Chinese-based company, and was expected to support MOVE token liquidity during its launch.
However, documents later revealed by independent sources indicated that Rentech acted not only as a representative of Web3Port but also appeared to act on behalf of the Foundation. This dual role has raised serious concerns about the legitimacy of the agreement.
The contract was reportedly facilitated by Rushi Manche, who remained involved in both Movement Labs and the Movement Foundation at the time. Legal experts associated with the Foundation had previously raised concerns about this arrangement.
They flagged it as one of the most problematic agreements they had encountered, warning of its potential impact. Despite these warnings, the deal proceeded.
Within 24 hours of MOVE’s launch on December 9, all 66 million tokens were sold on the open market. This occurred during a period when the project was expected to build early momentum and establish fair price discovery.
The sale placed downward pressure on the token’s price and created an environment with minimal buy orders and excessive sell activity. This situation drew attention from centralised exchanges and the broader crypto community.
Exchange Reactions and Fallout From the Token Sale
Binance, one of the largest cryptocurrency exchanges, responded to the sale by freezing approximately $38 million in funds linked to the transaction.
The exchange also severed ties with the market maker, stating that the trading activity had created an artificial environment with an imbalance between buying and selling.
Binance alleged that the firm had flooded its platform with sell orders while offering minimal support on the buying side. This behaviour contributed to instability in the token’s early market presence.
Movement Labs later released a statement asserting that the token sale was carried out without their knowledge or consent.
They emphasised that the activity breached the terms of the agreement and did not reflect their internal strategy. This statement, however, did not stop the consequences from continuing to unfold.
Coinbase, another major exchange, announced it would suspend trading for the MOVE token by 15 May.
This news caused additional pressure on the token’s price, which dropped 14% in a single day to its lowest recorded level of twenty cents. As of the most recent data, MOVE is down 21% on the day.
Within the project’s official Telegram group, a moderator confirmed that Rushi Manche had been suspended. The group also informed the community that an independent governance audit is in progress.
The audit is being conducted by a firm named Groom Lake, which has been tasked with reviewing the agreement with Rentech and evaluating Manche’s role in approving it.
The situation highlights a broader issue in decentralised projects. While Movement Labs and the Foundation were intended to function as separate entities, overlapping involvement by key individuals has blurred that distinction.
As a result, the token launch was affected not only by poor execution but also by weaknesses in internal oversight and accountability.
Conclusion
Movement Labs now faces a critical moment. The suspension of its co-founder and the fallout from the Rentech agreement have undermined investor confidence and damaged the project’s credibility.
The governance audit may provide clarity, but a complete recovery will depend on structural reform and transparency.
For other decentralised projects, this incident serves as a reminder that operational independence and proper controls are essential, especially when dealing with large token allocations and external partners.