Movement Labs Files for Chapter 11 Bankruptcy as MOVE Token Crisis Deepens

Getting your Trinity Audio player ready...

• Movement Labs filed Chapter 11 bankruptcy under Subchapter V in Delaware.
• Move Industries says its operations remain unaffected by the filing.
• MOVE has dropped more than 94% over the past year following governance and market-making controversies.

Movement Labs, the original developer behind the Movement Ethereum layer-2 blockchain, has filed for Chapter 11 bankruptcy protection in the United States, marking another major setback for a project that has struggled with governance issues and a collapsing token price.

Court records show the company filed for bankruptcy on July 15 in the US Bankruptcy Court for the District of Delaware under Subchapter V, a process designed to help eligible small businesses reorganize while continuing operations. The filing comes after months of controversy surrounding the Movement ecosystem, including an investigation into its token launch and market-making practices.

Movement Labs Begins Court-Supervised Restructuring

The Chapter 11 filing allows Movement Labs to continue operating while restructuring its business under court oversight. As part of the early proceedings, the court approved interim motions permitting the company to keep using its existing bank accounts and cash management systems.

The court also authorized debtor-in-possession financing, providing Movement Labs with funding to maintain day-to-day operations during the restructuring process. According to court documents, creditors have until Sept. 14 to submit claims related to the bankruptcy.

The filing is limited to Movement Labs and does not extend to other companies within the broader Movement ecosystem.

Move Industries Says Operations Continue Normally

Following the bankruptcy filing, Move Industries CEO Torab Torabi clarified on X that Move Industries remains unaffected by the court proceedings.

Move Industries assumed responsibility for developing and operating the Movement ecosystem from Movement Labs in December 2025. Torabi stated that the company continues normal operations despite the bankruptcy of the project’s former development entity.

The clarification seeks to distinguish the current operational structure from the legal proceedings involving Movement Labs.

MOVE Token Controversy Preceded Bankruptcy

The bankruptcy follows months of instability tied to the launch of the MOVE token and a controversial market-making agreement.

In May 2025, Movement Labs suspended co-founder Rushi Manche over a deal involving market maker Web3Port. The agreement gave Web3Port access to 66 million MOVE tokens, representing roughly 5% of the total supply.

The firm later sold those tokens, reportedly creating approximately $38 million in selling pressure. The incident triggered an independent investigation into the arrangement and raised broader questions about governance within the project.

Later that month, Coinbase suspended trading of the MOVE token after concluding that it no longer met the exchange’s listing requirements while the review continued.

The impact has been severe for investors. Over the past year, the MOVE token has lost more than 94% of its value and now trades near $0.01, reflecting the prolonged loss of market confidence.

Also Read: $20M Crypto Fraud? Federal Grand Jury Indicts Investor on 29 Criminal Counts

Movement Labs’ Chapter 11 filing represents the latest chapter in a difficult period for the Movement ecosystem. While Move Industries says development continues independently, the bankruptcy highlights the lasting consequences of governance controversies and market uncertainty. As the restructuring process moves forward, investors and creditors will closely watch whether the remaining ecosystem can rebuild trust following one of the sector’s most significant declines.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.