The blockchain infrastructure firm MVMT Labs, Inc., known publicly as Movement Labs, has formally filed for Chapter 11 bankruptcy protection in the United States, marking a significant collapse for a project once valued at $3 billion. The filing, dated July 15, 2026, follows a tumultuous period characterized by internal governance failures, a disastrous token launch, and a radical restructuring that attempted to distance the project’s core technology from its original corporate entity. Court documents first identified through PacerMonitor reveal that the Delaware-incorporated startup succumbed to financial and operational pressures after its MOVE token lost nearly all of its market value and its founding leadership was overhauled amid allegations of mismanagement.
The bankruptcy marks a stark reversal of fortune for a company that was once considered a rising star in the Ethereum Layer 2 ecosystem. Founded by Rushi Manche and Cooper Scanlon, MVMT Labs aimed to bridge the gap between the Move programming language—originally developed by Meta (formerly Facebook) for the Diem project—and the Ethereum network. The project’s value proposition centered on bringing the safety and performance of Move-based smart contracts to the liquidity and security of Ethereum, a mission that initially attracted tens of millions of dollars in venture capital.
The Rise and Fall of Movement Labs: A Financial Overview
The financial trajectory of MVMT Labs began with significant momentum. In April 2024, the company successfully closed a $38 million Series A funding round led by Polychain Capital. This followed a $3.4 million pre-seed round, bringing the total disclosed equity financing to approximately $41.4 million. The investor roster was prestigious, including participation from Hack VC, Placeholder, and several prominent angel investors in the Web3 space.
By early 2025, the company appeared to be reaching its zenith. Reports indicated that MVMT Labs was finalizing a Series B round of approximately $100 million. This round was reportedly led by CoinFund and supported by the digital assets arm of Brevan Howard. At that stage, the company’s private valuation was pegged at roughly $3 billion, reflecting high market expectations for Move-compatible scaling solutions.
However, the transition from a well-funded development lab to a live network operator proved fatal. The primary catalyst for the company’s decline was the launch of its native MOVE token. While intended to decentralize the network and incentivize validators, the launch became a lightning rod for controversy. An internal review and a subsequent investigation by industry analysts in April 2025 uncovered a problematic market-making agreement. The deal allegedly granted an intermediary firm, Rentech, control over 66 million MOVE tokens. The lack of transparency regarding this allocation, combined with allegations of improper market manipulation, led to a swift backlash from both centralized exchanges and the broader community.
The fallout was immediate. Binance, the world’s largest cryptocurrency exchange by volume, banned the market maker involved in the deal. The resulting loss of liquidity and investor confidence triggered a catastrophic price collapse. The MOVE token, which had debuted with significant fanfare, eventually plummeted to a trading price of $0.01, representing a 99% decline from its all-time high. This evaporation of market capitalization not only wiped out retail investors but also severely impaired MVMT Labs’ balance sheet, as much of its operational runway was tied to the value of its native assets.
Chronology of Events Leading to Chapter 11 Filing
The path to the July 2026 bankruptcy filing was paved by a series of escalating crises throughout 2025 and 2026. The following timeline outlines the key milestones in the company’s decline:
- April 2024: MVMT Labs secures $38 million in Series A funding, positioning itself as a leader in Move-on-Ethereum infrastructure.
- January 2025: Rumors of a $100 million Series B funding round surface, valuing the company at $3 billion.
- April 2025: The MOVE token launch occurs, followed immediately by an investigation into the Rentech market-making deal involving 66 million tokens.
- Late April 2025: Binance bans the associated market maker. Co-founder Rushi Manche exits the project amid internal pressure and governance scrutiny.
- May 2025: A massive management overhaul is announced. Former employees form a new entity, Move Industries, to take over the development of the ecosystem.
- June 2025 – Early 2026: MOVE token price continues its downward spiral, eventually reaching $0.01. The project shifts its focus from a general-purpose Layer 2 to cross-border payments and stablecoin settlements.
- June 2026: Movement (under Move Industries) announces access to licensed payments infrastructure in North America and Europe, attempting to pivot to a regulated fintech model.
- July 15, 2026: MVMT Labs, Inc. files for Chapter 11 bankruptcy protection in federal court.
- July 21, 2026: Move Industries CEO Torab Torabi issues a public statement distancing the new entity from the MVMT Labs filing.
The Creation of Move Industries: A "Clean Break" Strategy
In May 2025, as the controversy surrounding the MOVE token reached a fever pitch, the project underwent a radical structural transformation. This involved the creation of Move Industries, a separate legal entity designed to oversee the Movement ecosystem. The move was framed by leadership as a "clean break" from the legacy issues of MVMT Labs.
The new leadership team was led by Torab Torabi as Chief Executive Officer and Will Gaines as President and Chief Marketing Officer. Both were former employees of Movement Labs who sought to salvage the project’s underlying technology while shedding the baggage of the previous administration. Under Torabi, Move Industries pledged to implement more rigorous governance standards, transparent community engagement, and tighter oversight of financial dealings.
This transition also coincided with a major strategic pivot. Recognizing that the market for general-purpose Ethereum Layer 2s was becoming increasingly saturated and that the "Movement" brand had been tarnished in the retail sector, the team shifted its focus toward the enterprise and payments sectors. The revised roadmap prioritized cross-border payments, remittances, and stablecoin settlement. By obtaining access to licensed payments infrastructure, the new entity aimed to position itself as a regulated bridge between traditional finance and blockchain technology.
Official Responses and Legal Clarifications
Following the news of the MVMT Labs bankruptcy filing, Move Industries took immediate steps to reassure stakeholders that the ecosystem’s development would continue. On July 21, 2026, Torab Torabi issued a statement via social media to clarify the distinction between the two companies.
"You may have seen the news about the Chapter 11 filing by MVMT Labs, Inc. on July 15th," Torabi stated. "Two things worth saying clearly: 1 – MVMT Labs, Inc. is a separate legal entity, and Move Industries is not part of that filing. 2 – Move Industries is operating normally."
The statement was intended to prevent a panic among remaining token holders and partners who might have assumed that the entire Movement project was being liquidated. However, the legal relationship between the bankrupt MVMT Labs and the operational Move Industries remains a point of interest for creditors. In Chapter 11 proceedings, the transfer of intellectual property, personnel, and assets from a failing entity to a new one is often scrutinized to ensure that the rights of creditors were not bypassed.
Analysis of Implications for the Blockchain Sector
The bankruptcy of MVMT Labs serves as a cautionary tale for the broader cryptocurrency industry, particularly regarding "high-valuation, low-float" token launches. Several key implications emerge from this event:
1. The Vulnerability of VC-Backed Valuations
The $3 billion valuation assigned to MVMT Labs in early 2025 was based on future potential rather than current utility or revenue. When the token launch failed to meet expectations, the discrepancy between the private valuation and the public market reality became impossible to bridge. This collapse may lead venture capital firms to adopt more conservative valuation models for infrastructure projects that have not yet achieved significant network effects.
2. The Move Language’s Competitive Landscape
The Move programming language was designed for safety and formal verification, intended to prevent the smart contract bugs that have led to billions in losses on other chains. While the technology itself remains highly regarded, the failure of MVMT Labs demonstrates that superior technology cannot overcome poor governance and market execution. Competing Move-based chains, such as Aptos and Sui, may see an influx of developers migrating from the Movement ecosystem, or they may face increased skepticism from investors wary of the "Move" narrative.
3. Governance and Market-Making Scrutiny
The Rentech controversy highlights the opaque nature of market-making deals in the crypto industry. The fact that a single intermediary could allegedly control a significant portion of the token supply without clear disclosure is a systemic risk. Regulators and centralized exchanges are likely to increase their demands for transparency regarding token allocations and market-making agreements for new listings.
4. The "Phoenix" Rebranding Model
The attempt by Move Industries to distance itself from MVMT Labs is a strategy seen before in the crypto space (notably with the transition from Terraform Labs to the Luna Classic/Luna 2.0 ecosystem). While this can allow technical development to continue, it often leaves early investors and token holders in a legal limbo, as the value stays with the old, bankrupt entity while the "new" entity moves forward with the technology. The success of Move Industries will depend on its ability to regain the trust of a community that saw 99% of its MOVE token value vanish.
Conclusion
The Chapter 11 filing of MVMT Labs, Inc. marks the end of an era for one of the most ambitious Ethereum scaling projects of the mid-2020s. While the underlying Move-based technology may find a second life under the banner of Move Industries, the bankruptcy remains a stark reminder of the volatility and governance risks inherent in the blockchain sector. As the court proceedings move forward, the focus will shift to how Move Industries manages its new pivot into the payments space and whether it can truly achieve the "clean break" its leadership has promised. For now, the MOVE token stands as a symbol of the speculative excesses that continue to challenge the maturity of the digital asset market.
