Movement Labs, the company once positioned as the developer behind the Movement blockchain project, has filed for bankruptcy protection in Delaware after transferring key assets, token rights and operating functions to other entities connected to the wider Movement ecosystem.
The filing places Movement Labs under Chapter 11 protection through the streamlined Subchapter V process, a route designed for smaller businesses seeking faster restructuring and lower administrative costs. Court documents show the company entered bankruptcy with estimated assets of between $100,000 and $500,000, liabilities of up to $10 million and fewer than 299 creditors.
The case presents a sharp reversal for a startup that had raised tens of millions of dollars in venture funding and had been associated with a high-profile blockchain network. By the time of the bankruptcy petition, Movement Labs said it had no employees, no operating assets and only about $60,000 in cash.
The filing follows months of controversy around the MOVE token, including allegations linked to a large token sale, trading suspensions on major platforms and an ongoing investigation by the U.S. Department of Justice. MOVE has fallen more than 94% over the past year and has recently traded near one cent, according to market data.
What the filing shows
Movement Labs chose Subchapter V of Chapter 11, a restructuring path typically used by smaller companies. Unlike larger Chapter 11 cases, Subchapter V can move more quickly and often avoids the formation of official creditor committees. That can reduce costs and shorten court proceedings, but it can also limit the number of parties directly involved in negotiating the company’s reorganization plan.
The documents filed in Delaware show a business with little left inside the legal entity that entered bankruptcy. Movement Labs reported no current employees and no ongoing operating business. Its remaining estate consists mainly of limited cash and claims connected to its prior operations.
Liabilities, however, are far larger than the company’s remaining cash position. The filing lists potential debts reaching as high as $10 million. Among the unsecured claims is a demand from former co-founder Rushi Manche, who is seeking more than $1.6 million from the estate for legal defense costs, according to the court documents.
Manche remains a 34.25% shareholder of Movement Labs, but the filings indicate he no longer has decision-making authority over the company. He was previously removed from his role after a market manipulation controversy connected to MOVE token activity.
The bankruptcy case is now centered on how remaining claims will be handled, how proposed financing will be approved and whether the restructuring can be completed under the proposed terms.
Asset transfers before bankruptcy
Before seeking bankruptcy protection, Movement Labs transferred major rights and business functions away from the company.
Court documents describe a “Fenix Project Agreement” under which Movement Labs transferred intellectual property, MOVE token issuance rights and related contracts to the Movement Foundation. The foundation is a separate entity associated with the Movement ecosystem.
Movement Labs also sold its core team to Move Industries for $1.2 million. After that transaction, the company no longer had employees or meaningful operating assets, according to the bankruptcy filing.
That sequence has drawn attention because the core technology, personnel and token-related rights appear to have continued under different corporate structures while Movement Labs itself entered bankruptcy with pending claims and limited resources.
People following the case have described the arrangement as leaving Movement Labs as a shell entity responsible for unresolved liabilities, while other entities retained the technology, personnel and operational direction of the ecosystem. The legal outcome will depend on how the bankruptcy court views the transactions, the proposed financing and any objections raised by creditors or other parties.
For traders and other market participants, the case highlights the importance of understanding which legal entity actually controls a project’s technology, contracts, token rights and treasury-related resources. In fast-moving digital asset markets, public branding often remains consistent even when the underlying corporate structure changes.
Financing proposal and legal protections
A key part of the bankruptcy case is a proposed financing package from MNF DIP SPV Ltd., a Cayman Islands entity described in the filings as a subsidiary of the Movement Foundation.
The proposed debtor-in-possession financing would provide up to $5.7 million. Such financing is commonly used in Chapter 11 cases to fund operations, legal costs, debt payments and exit plans while a company remains under court protection.
In this case, the proposed financing is especially important because Movement Labs has little cash remaining. The company reported roughly $60,000 in cash at the time of the filing, far below the amount needed to address legal expenses, restructuring costs and creditor claims.
The financing terms described in the court documents include restrictions on legal action against the Movement Foundation, Move Industries and related personnel. Those protections do not extend to former co-founder Rushi Manche, according to the filings.
Such restrictions are likely to be closely reviewed because they could affect the ability of the bankruptcy estate or other parties to pursue claims tied to the pre-bankruptcy transfers. Financing arrangements in Chapter 11 often include negotiated protections for lenders, but courts typically examine whether those protections are appropriate and whether they unfairly limit potential claims.
The docket listed Aug. 20 at 4 p.m. Eastern Time as the deadline for objections to the financing order. A hearing was scheduled for Aug. 27 before Judge Thomas M. Horan.
The hearing is expected to be a critical moment in the case. Approval of the financing could provide Movement Labs with the funds needed to move through bankruptcy. Objections, if sustained, could delay the case or force changes to the proposed terms.
MOVE token controversy remains central
The bankruptcy filing comes after a broader controversy involving the MOVE token, the digital asset tied to the Movement network.
The dispute centers in part on the sale of 66 million MOVE tokens, valued at approximately $38 million at the time, and allegations involving insider activity and unauthorized distribution to consultants. The controversy led to trading suspensions on several platforms and intensified scrutiny of the project’s internal controls.
The U.S. Department of Justice is continuing to investigate matters connected to the token activity, according to the information disclosed around the case. The existence of the investigation does not by itself establish wrongdoing by any party, and allegations remain subject to legal review.
The Movement Foundation later repurchased about $38 million worth of MOVE tokens using recovered funds. That move was presented as an effort to address disruption caused by the disputed token activity, but it did not end the federal investigation or remove uncertainty around the project’s governance history.
The token’s market performance has reflected that uncertainty. Over the past twelve months, MOVE has lost more than 94% of its value. The asset has recently traded near one cent after a steep decline and multiple trading disruptions.
For traders, the price collapse has underscored how quickly confidence can erode when token governance, distribution practices and corporate control become subjects of dispute.
Changes in leadership
Movement’s leadership structure has also changed significantly.
Rushi Manche, one of the company’s co-founders, was removed from his role following the market manipulation controversy. Although he remains a major shareholder of Movement Labs, the bankruptcy documents indicate he no longer controls company decisions.
Another co-founder, identified in prior reporting as Cooper, previously transferred leadership responsibilities to Move Industries chief executive Torabi and has since stepped away from direct management of the project.
That left Move Industries and the Movement Foundation as the central entities associated with the continuing development and management of the Movement ecosystem. Movement Labs, by contrast, entered bankruptcy without employees or operating assets.
The separation between the bankrupt company and the ongoing ecosystem is likely to remain a central issue. When a blockchain project involves multiple entities, questions can arise over which organization is responsible for token rights, software development, community obligations, commercial contracts and past liabilities.
Those questions become more significant when a corporate entity with historical responsibility for a project enters bankruptcy after transferring assets elsewhere.
A rapid collapse after major funding
Movement Labs’ bankruptcy stands out because of the gap between the company’s prior funding and its financial condition at the time of filing.
The startup had raised a reported $41.4 million in venture funding. Less than two years later, court documents show it entered bankruptcy with minimal cash, no employees and no operating assets.
The filing does not by itself provide a complete accounting of how the company spent its funds. More detail may emerge through bankruptcy schedules, court hearings, creditor objections and any related investigations.
Still, the case shows how venture-backed digital asset companies can deteriorate quickly when token controversies, legal expenses, governance disputes and restructuring decisions converge. A project may maintain a public network, token and community presence while the original company behind it becomes financially distressed.
That split can make it difficult for traders and other market participants to assess risk. A token may continue to trade, software may continue to run and affiliated teams may continue operations, even as the original developer has entered insolvency proceedings.
Legal questions around the corporate structure
The transfers to Movement Foundation and Move Industries are likely to receive attention as the bankruptcy moves forward.
In Chapter 11 cases, courts often examine transactions that occurred before a filing, especially when valuable assets were moved out of the debtor before creditors were paid. The specific legal treatment depends on timing, valuation, contractual terms, whether fair value was received and whether the debtor was insolvent when transactions occurred.
Movement Labs received $1.2 million for the sale of its core team to Move Industries. It also transferred intellectual property, token issuance rights and contracts under the Fenix Project Agreement. The value of those rights, and whether the transfers were properly structured, could become important if any party challenges the transactions.
The proposed financing terms may also matter because they include protections for Movement Foundation, Move Industries and related personnel. If approved, those protections could limit certain actions connected to the restructuring. If challenged, the court may need to balance the need for financing against the rights of creditors and the estate.
The exclusion of Manche from those protections is also notable. It leaves him in a different legal position from the foundation, Move Industries and other related personnel covered by the proposed financing language.
What comes next
The next major step is the court’s consideration of the financing order. The scheduled hearing before Judge Horan will determine whether Movement Labs can access the proposed funds and under what conditions.
If the financing is approved, the company may proceed toward an exit plan under Subchapter V. That plan would need to address creditor treatment, remaining claims and the proposed path out of bankruptcy.
If objections are filed and the court requires changes, the timeline could shift. Disputes over legal protections, asset transfers or creditor treatment could make the case more complex than a typical small-business restructuring.
The Justice Department investigation remains a separate but important issue. Bankruptcy can organize a company’s financial obligations, but it does not automatically resolve criminal or regulatory inquiries involving token sales, market conduct or related activity.
The future of the Movement ecosystem will likely depend on more than the bankruptcy outcome. The continuing roles of Movement Foundation and Move Industries, the management decisions of current executives, the state of developer activity and the number of active users on Movement-based applications will all influence whether the network can recover from the controversy.
For now, the bankruptcy filing provides a clearer view of the original company’s condition. Movement Labs entered court protection with little cash, no staff and no operating business, while the project’s core assets and personnel had already shifted to other entities. The court process will determine how much of that structure remains intact and how remaining claims against the company will be resolved.
Want deeper context on MOVE’s tech and ecosystem? Explore our guide What is Movement (MOVE) before the next court update.
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