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<ul><li style="font-weight: 400">MVMT Labs entered Chapter 11 with up to $10 million in liabilities and reported assets below $500,000.</li><li style="font-weight: 400">Former co-founder Rushi Manche holds the largest unsecured creditor claim, valued above $1.6 million.</li><li style="font-weight: 400">The MOVE token crisis began after 66 million tokens were sold through a disputed market-making agreement.</li><li style="font-weight: 400">Move Industries remains separate from MVMT Labs, keeping Movement blockchain development outside bankruptcy.</li></ul>MVMT Labs, the original developer behind the Movement blockchain, has entered Chapter 11 after a token-launch controversy weakened its finances and corporate structure. The July 15 <a href="https://www.pacermonitor.com/public/case/65708680/MVMT_Labs,_Inc" rel="noopener noreferrer nofollow">filing</a> places the company under Delaware <a href="https://blockonomi.com/bitcoin-depot-btcd-collapses-americas-top-crypto-atm-network-files-chapter-11-bankruptcy/" rel="noopener noreferrer nofollow">bankruptcy protection</a> while creditors, former executives, and service providers pursue claims against its remaining assets.<div class="embed-x"><blockquote class="twitter-tweet">Movement Labs Files for Chapter 11 Bankruptcy With Liabilities Above $1 MillionMovement Labs, the developer of the Movement blockchain, has filed for Chapter 11 bankruptcy protection. Court filings show the company has between $100,000 and $500,000 in assets, more than $1… <a href="https://t.co/7wJjZuYye4" rel="noopener noreferrer nofollow">pic.twitter.com/7wJjZuYye4</a>— Wu Blockchain (@WuBlockchain) <a href="https://x.com/WuBlockchain/status/2079641014067925232?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">July 21, 2026</a></blockquote></div>Court records show estimated assets between $100,001 and $500,000, compared with liabilities ranging from $1 million to $10 million. The petition lists 200 to 999 creditors, highlighting the obligations now facing a company once promoted as a major crypto infrastructure builder.<h2 id="b-subchapter-v-filing-reveals-deep-debt-and-creditor-pressure-b">Subchapter V Filing Reveals Deep Debt and Creditor Pressure</h2>The case, filed as 26-11113, was assigned to Judge Thomas M. Horan in the <a href="https://blockonomi.com/bitcoin-depot-btcd-collapses-americas-top-crypto-atm-network-files-chapter-11-bankruptcy/" rel="noopener noreferrer nofollow">U.S. Bankruptcy</a> Court for the District of Delaware. MVMT Labs selected Subchapter V, a streamlined restructuring process for eligible small businesses seeking court-approved repayment or reorganization plans.Under that framework, the debtor remains in control while a trustee supervises negotiations and financial disclosures. Jeffrey Schwendeman was appointed trustee, and the company requested approval for post-petition financing.Consequently, a creditors’ meeting is scheduled for August 20, while most proofs of claim must be submitted by September 14. The company’s restructuring plan is due October 13, creating a timetable for determining whether it can reorganize or wind down.Former co-founder Rushikesh “Rushi” Manche holds the largest listed unsecured claim, exceeding $1.6 million. He also retains a 34.25% ownership stake in MVMT Labs.Other creditors include the Delaware Division of Corporations, Move Industries, Anchorage Digital, and blockchain security company OtterSec. Their claims reflect legal, operational, and corporate obligations.In March, the Delaware Court of Chancery <a href="https://law.justia.com/cases/delaware/court-of-chancery/2026/c-a-no-2025-1407-cdw.html" rel="noopener noreferrer nofollow">ruled</a> that Manche was entitled to advancement of legal costs. Those expenses relate to a federal investigation involving the company and activities surrounding the MOVE <a href="https://moneycheck.com/institutional-bitcoin-mining-access-arrives-on-base-through-omn-token-launch/" rel="noopener noreferrer nofollow">Token launch</a>.<h2 id="b-disputed-move-market-making-deal-triggered-the-collapse-b">Disputed MOVE Market-Making Deal Triggered the Collapse</h2>The dispute began after the MOVE Token launched in December 2024. A market-making agreement gave Rentech access to 66 million tokens, equal to about 5% of supply.Binance later said the market maker sold the allocation with little corresponding buy-side activity. The sales generated roughly $38 million in USDT before Binance removed the account for misconduct.Movement Network Foundation said it had not known about the activity. It later pledged recovered proceeds toward a $38 million MOVE Token repurchase program.However, a CoinDesk <a href="https://www.coindesk.com/tech/2025/04/30/inside-movement-s-token-dump-scandal-secret-contracts-shadow-advisors-and-hidden-middlemen" rel="noopener noreferrer nofollow">investigation</a> identified internal concerns regarding the agreement’s structure and Rentech’s relationship with Web3Port. Rentech, nevertheless, denied wrongdoing and rejected claims of misrepresentation.The crypto scandal soon spread beyond the token market. <a href="https://parameter.io/coinbase-coin-stock-jumps-over-11-on-regulatory-momentum-and-base-network-expansion/" rel="noopener noreferrer nofollow">Coinbase</a> suspended MOVE trading in May 2025, while Movement commissioned an outside investigation into the arrangement.MVMT Labs later terminated Manche, and development responsibilities shifted away from the bankrupt company. Move Industries, formed by former Movement personnel, now oversees much of the network’s work.Chief Executive Torab Torabi said Move Industries remains legally separate and continues operating normally. Therefore, the bankruptcy does not automatically place the blockchain or its current developer under court protection.<div class="embed-x"><blockquote class="twitter-tweet">IMPORTANT CLARIFICATIONS1. I am the CEO of Move Industries and Move Industries is the developer team of the Movement ecosystem2. MVMT Labs filed for bankruptcy3. MVMT Labs has no affiliation with Move Industries, thus Move Industries is not involved in the bankruptcy4.… <a href="https://t.co/xDs0z4dGrY" rel="noopener noreferrer nofollow">https://t.co/xDs0z4dGrY</a><a href="https://t.co/0Zjfif82YU" rel="noopener noreferrer nofollow">pic.twitter.com/0Zjfif82YU</a>— Torab (@torabyou) <a href="https://x.com/torabyou/status/2079673326902083600?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">July 21, 2026</a></blockquote></div>The filing now turns attention toward creditor claims, financial schedules, and the October restructuring plan. Those documents will show whether <a href="https://coincentral.com/movement-expands-stablecoin-payment-rails-across-us-eu-and-canada/" rel="noopener noreferrer nofollow">Movement Labs</a> can preserve assets or must close.The post <a href="https://blockonomi.com/movement-labs-files-for-chapter-11-bankruptcy-after-38m-move-token-scandal/" rel="noopener noreferrer nofollow">Movement Labs Files for Chapter 11 Bankruptcy After $38M MOVE Token Scandal</a> appeared first on <a href="https://blockonomi.com" rel="noopener noreferrer nofollow">Blockonomi</a>.

Movement Labs Files for Chapter 11 Bankruptcy After $38M MOVE Token Scandal

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