Movement Labs seeks Chapter 11 protection amid MOVE token crisis spanning several months
The developer of blockchain technology will maintain operations while under judicial oversight during its restructuring process, which comes after a market-making controversy, the suspension of one of its founders, and the removal from multiple exchanges that severely impacted the project.
Movement Labs, the company responsible for developing the Movement Ethereum layer-2 blockchain platform, has initiated Chapter 11 bankruptcy proceedings seeking protection in the US Bankruptcy Court for the District of Delaware, based on judicial documents.
The bankruptcy petition was submitted on July 15 utilizing Subchapter V, which provides a simplified reorganization pathway designed specifically for eligible small business entities. Through this filing, the organization can maintain its operational activities while undergoing restructuring under judicial oversight.
The court granted approval on Monday for interim motions that enable Movement Labs to preserve its existing banking relationships and cash management infrastructure, as well as secure debtor-in-possession financing necessary to sustain operations throughout the bankruptcy proceedings. September 14 has been established as the deadline for creditors to submit their claims.
In the aftermath of the bankruptcy filing, Move Industries CEO Torab Torabi shared on X that the Chapter 11 proceedings pertain exclusively to Movement Labs. Move Industries, the entity that assumed responsibility for the development and operational management of the Movement ecosystem from Movement Labs in December 2025, remains fully operational without interruption, as stated by Torabi.
Controversial market-making deal preceded bankruptcy filing
The bankruptcy petition arrives after an extended period of controversy and instability connected to the rollout of Movement's MOVE token and a disputed market-making contract.
In May 2025, Movement Labs placed co-founder Rushi Manche on suspension following his involvement in facilitating an agreement with Web3Port. The market-making firm obtained 66 million MOVE tokens, representing approximately 5% of the total token supply, and subsequently liquidated these holdings, which allegedly generated around $38 million in selling pressure that drove prices downward and triggered an independent investigation into the matter.
Later during the same month, Coinbase halted MOVE trading operations after concluding that the token failed to satisfy its listing requirements, while the investigation examining the market-making arrangement remained ongoing.
The bankruptcy filing comes on the heels of an extended period of depreciation for the MOVE token, which has experienced a decline exceeding 94% throughout the past year, currently trading at approximately $0.01.
