Movement Labs has suspended co-founder Rushi Manche amid a scandal related to a dubious market-making deal that resulted in a significant token sell-off.
The Deal That Went Wrong
The issues arose from a deal between Movement Foundation and a third-party entity named Rentech, reportedly fronted by Singapore-based financier Galen Law-Kun. According to leaked contracts and internal messages, Rentech was supposed to facilitate liquidity provisioning for MOVE through Chinese market maker Web3Port.
As a result, it was decided to transfer 66 million MOVE tokens to an unsightly company, which is approximately 5% of the circulating volume. These conditions were soon described by lawyers as "unusual" and "reckless." One of the provisions was Web3Port's permission to liquidate tokens upon reaching the capitalization of the MOVE of $ 5 billion, dividing the profit 50/50 with the Movement Foundation. This created a threat of market manipulation.
Predictably, upon MOVE’s launch on Binance on December 9, 2024, wallets linked to Web3Port reportedly began offloading their holdings, triggering a $38 million sell-off. Subsequently, the token price plummeted, leading Binance to ban the implicated market maker for breach of contract.
Manche Under Investigation
YK Pek, the foundation’s general counsel, initially condemned the proposal between Movement and Rentech, calling it 'the worst deal I have ever seen.' However, a revised version was signed, raising questions about who pushed it through.
Co-founder Manche is reported to have circulated the Rentech deal internally and has since been placed on administrative leave pending a third-party investigation led by Groom Lake. Movement Labs confirmed his suspension in a brief statement, stating that the decision was made in light of ongoing events and the ongoing review regarding organizational governance.
Impact on the Market and Reputation
Following Manche’s suspension, MOVE’s price dropped by more than 27%, going from an intraday high of $0.2543 to a new all-time low of $0.1848. Insiders suggest that the situation has severely impacted the reputation of Movement and all parties involved.
The situation surrounding Movement Labs highlights the need for transparency and responsible governance within the crypto industry, especially regarding liquidity and third-party engagements.
