Movement Labs officially filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on July 15. The filing, which came to light this week, reveals a severe balance sheet imbalance: the company holds a maximum of $500,000 in assets against liabilities of up to $10 million.
The company filed under Subchapter V, a small business reorganization option that allows entities to continue operating under court supervision. The move makes Movement Labs the second major crypto firm to enter bankruptcy in the U.S. recently, following a similar filing by Bitcoin Depot in May 2026.
The Former CEO’s Unusual Position
The creditor list seeking repayment from Movement Labs highlights a notable anomaly. Co-founder and former CEO Rushikesh “Rushi” Manche tops the list of unsecured creditors. He is claiming over $1.6 million despite being ousted from leadership in May 2025. Manche still holds a 34.25% equity stake in the company.
Alongside Manche, several other parties are in line for repayment. The creditor roster includes the Delaware Division of Corporations with a 459,000 British pounds claim, development entity Move Industries, custody platform Anchorage Digital, and security auditor OtterSec.
The bankruptcy marks the culmination of a botched market-making deal. The company had previously transferred 66 million MOVE tokens, representing 5% of the total supply, to an intermediary named Rentech. Just one day after MOVE debuted on exchanges, a crypto wallet linked to Web3Port offloaded the token allocation, pocketing $38 million. This sudden dump triggered a severe crash in MOVE’s price.
The Fate of the Network and Token Price
Major crypto exchanges responded swiftly to the incident. Binance froze the accounts of the involved market maker and withheld their profits, while Coinbase halted all MOVE trading. In a remediation effort, the Movement Network Foundation announced a $38 million token buyback program using funds seized from the perpetrators.
Development of the Movement network itself has since shifted hands. In December 2025, Move Industries took over operations and pivoted the project by transitioning its architecture from an Ethereum layer-2 to an independent layer-1 blockchain. Move Industries CEO Torab Torabi assured that his company is operating normally as a distinct legal entity from Movement Labs.
While that legal barrier may contain debt contagion, it has done little to stop the selling pressure. The MOVE token is currently languishing around $0.0108, down over 94% in the past year. Token holders now await clarity on whether the foundation’s buyback program can stem the downside, or if the token will continue to slide alongside its founding company’s debts.
Reported via crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
