Movement Labs has officially suspended its co-founder, Rushi Manche, amid growing fallout from a controversial market maker arrangement that triggered a $38 million sell-off of the MOVE token. The decision, confirmed in a May 2 announcement on X, follows mounting scrutiny over a deal that has rattled the project’s community and drawn regulatory attention.
The dispute centers on an agreement Manche helped negotiate through Rentech, involving market maker Web3Port. The deal resulted in Web3Port acquiring 66 million MOVE tokens—roughly 5% of the total supply. Web3Port later dumped the tokens on the open market in December 2024, causing a sharp decline in MOVE’s value and sparking backlash from investors and exchanges alike.
As part of its response, the Movement Network Foundation has initiated a third-party investigation into the transaction. The review is being conducted by private intelligence firm Groom Lake and will assess the timeline, terms, and potential misconduct surrounding the deal.
Coinbase reacted swiftly, suspending MOVE token trading due to what it described as the asset’s failure to meet listing standards—further compounding the damage to the project’s credibility.
Market Makers Under Scrutiny Again
Market makers have long been positioned as essential infrastructure for crypto projects—providing liquidity, reducing slippage, and helping tokens secure coveted listings on major exchanges. But recent controversies have exposed the darker side of the industry, where misaligned incentives and opaque agreements can destabilize markets before a token even has the chance to find its footing.
A mid-2024 industry report revealed that nearly 78% of token launches since April 2024 were mishandled, with increasing speculation that reckless or predatory market maker practices played a central role. While some market makers serve as launchpads for fledgling coins, others appear to operate more like wrecking balls—offloading massive token allocations, distorting price action, or manipulating volume to mislead investors.
Legal Cases Mounting Across the Sector
Legal scrutiny is intensifying. Creditors of the now-defunct Celsius Network have accused top-tier market maker Wintermute of engaging in wash trading to artificially inflate the platform’s token volume. Meanwhile, Fracture Labs, the Web3 studio behind the game Decimated, filed a lawsuit against Jump Crypto, alleging it orchestrated a pump-and-dump scheme involving their in-game currency, DIO.
Even more damning, a Wall Street Journal investigation accused Binance-affiliated DWF Labs of executing $300 million worth of wash trades and backroom deals across multiple projects—charges the firm has denied. And the regulatory crackdown continues: in recent months, CLS Global was fined for fraud in Massachusetts, while Gotbit’s founder was extradited to the U.S. to face charges related to market manipulation and conspiracy.
The Movement Labs controversy now sits squarely within this wider pattern, raising questions not just about one token or one deal—but about the structural integrity of market maker relationships in an industry still writing its rules in real time.
Quick Facts
- Movement Labs suspended co-founder Rushi Manche over a controversial market maker deal.
- The deal led to the sale of 66 million MOVE tokens, causing a $38 million price drop.
- Coinbase suspended trading of the MOVE token due to listing standard concerns.
- A third-party investigation by Groom Lake is underway to examine the incident.
