Original title: Inside Movement's Token-Dump Scandal: Secret Contracts, Shadow Advisors, and Hidden Middlemen
Original author: Sam Kessler, CoinDesk.
Translation by: Aki Chen, Wu Says Blockchain
It is reported that the Layer 2 blockchain project Movement Labs is investigating a market-making agreement incident suspected of fraud. Originally intended to facilitate the smooth listing of MOVE crypto tokens, this arrangement ultimately evolved into a sell-off scandal that shook the market. The agreement allegedly transferred control of 66 million MOVE tokens to an intermediary Rentech with an ambiguous identity without the project party being fully informed. Rentech played both 'Web3Port subsidiary' and 'foundation agent' roles in the agreement, suspected of self-dealing. This arrangement directly triggered a sell-off of tokens worth $38 million the day after MOVE was listed, leading to a significant drop in price and prompting Binance to impose a ban.
Despite internal clear opposition to the agreement, senior management still pushed for its signing, raising serious concerns about governance failure, lack of due diligence, and conflicts of interest. Currently, several executives and legal advisors are under scrutiny, and the project's governance structure and cooperation mechanisms are facing comprehensive questioning. This crisis reveals deep flaws in Movement's institutional design, risk control, and compliance capabilities, which may have long-term impacts on its future reputation and ecological building.
MOVE token plummets upon launch, Movement Labs suspected of being misled into signing a high-risk agreement.
According to internal documents reviewed by CoinDesk, the blockchain project behind the MOVE crypto token, Movement Labs, is conducting an internal investigation into a controversial financial agreement. This agreement may have granted major control over the token market to a single entity without the project party being fully aware, causing structural imbalances.
The agreement directly led to the concentrated sell-off of 66 million MOVE tokens the day after they were listed on exchanges on December 9, 2025, triggering a cliff-like drop in the token price and sparking widespread doubts about 'insider trading' and interest transfer. Notably, the MOVE project received public endorsement from the Trump-backed crypto venture fund World Liberty Financial, making this event even more politically and industry impactful.
Cooper Scanlon, co-founder of Movement Labs, stated in an internal Slack announcement on April 21 that the team is investigating a key issue: how more than 5% of MOVE tokens originally reserved for market maker Web3Port were transferred to an intermediary named Rentech.
It is alleged that the Movement Foundation was initially informed that Rentech was a subsidiary of Web3Port, but the investigation revealed that this was not the case. Rentech has denied any misleading behavior.
Rentech unilaterally controls nearly half of the circulating supply, leading to an imbalance in the circulation structure of MOVE tokens.
According to an internal memorandum from the Movement Foundation, the agreement signed with Rentech lent out about half of the total circulating supply of MOVE tokens to this single counterparty. This arrangement gave Rentech unusually significant market influence right at the token's listing.
Multiple interviewed industry experts pointed out that this centralized structure severely deviates from the decentralized distribution principles typically pursued by crypto projects and is highly likely to be used to manipulate token prices or achieve unilateral arbitrage.
Senior crypto industry founder Zaki Manian pointed out after reviewing the contract version obtained by CoinDesk that some terms included in the agreement essentially set clear incentives for 'artificially inflating the fully diluted valuation (FDV) of MOVE tokens to over $5 billion before profiting from selling to retail investors.'
He stated: 'Even if such discussions only appeared in written documents, it is already shocking.' This comment further intensified external doubts about the purpose and ethical bottom line of the Rentech agreement.
Theoretically, market makers are hired by project parties to provide liquidity services for newly launched tokens, with the responsibility to buy and sell with funds provided by the project party on exchanges, in order to maintain price stability and market depth. However, in practice, this role also carries risks of abuse.
Once regulatory oversight is lacking or agreements are opaque, market makers may become tools for insiders to manipulate the market and quietly transfer large token holdings, making it hard for the outside world to notice, thereby severely harming the interests of ordinary investors and market fairness.
Contracts expose a gray area in crypto: How public projects can become tools for a few to profit in a regulatory vacuum.
A series of contract documents obtained by CoinDesk revealed a little-known gray area in the crypto industry: In an environment lacking effective regulation and legal transparency, blockchain projects originally aimed at the public can easily be exploited as vehicles for a few to profit privately.
The contents of these agreements show that if the project party neglects structural design and compliance checks, so-called 'decentralized' projects could be completely privatized by a few operators through unequal terms, deviating from their original fair and open intentions.
In the crypto market, rumors of manipulation and abuse surrounding market-making mechanisms have long been prevalent, but the specific details of related operations, contract structures, and interest arrangements are rarely made public. It is precisely for this reason that the internal contracts and agreement details disclosed in the Movement Labs incident become a rare window for observing the black box of Web3 project operations and the gray area of market-making, refocusing the industry on the principle of 'transparency,' which is the most basic yet often overlooked.
The market-making contract reviewed by CoinDesk shows that Rentech appeared in the transaction with Movement Foundation in two capacities: as an agent of Movement Foundation and as a subsidiary of Web3Port signing the agreement. This structure potentially provided Rentech with 'intermediary dominance' in the transaction, theoretically allowing it to set transaction terms independently and profit under conditions of information asymmetry.
The market-making agreement between Movement and Rentech ultimately opened a sell-off channel for a group of wallets associated with Web3Port. This Chinese financial institution claimed to have served MyShell, GoPlus Security, and crypto fund World Liberty Financial, which is linked to Donald Trump. These wallets quickly liquidated tokens worth about $38 million the day after the MOVE token debuted on exchanges, causing severe market volatility and raising concentrated doubts about the motives and legitimacy of the agreement arrangements themselves.
Binance bans market-making accounts for 'violations,' Movement urgently launches token buyback.
After the incident escalated, major exchange Binance has banned the market-making accounts involved, citing 'improper behavior.' Meanwhile, the Movement project party urgently announced the launch of a token buyback plan in an attempt to stabilize market sentiment and regain community trust.
Similar to startup employee stock option mechanisms, most crypto projects set lock-up periods during token distribution to limit large holdings from core team members, investors, and early participants during the project's initial trading phase.
This mechanism was originally intended to protect market stability and prevent insiders from profiting in advance by leveraging information advantages. However, in the Movement incident, the liquidity arrangements that allowed the relevant tokens to bypass lock-up restrictions became the core issue that triggered external doubts.
Binance's ban on the involved accounts quickly sparked associations within the community, with many observers believing this could mean that internal personnel of the Movement project had reached private agreements with Web3Port to bypass normal lock-up mechanisms and sell tokens early.
In response to this doubt, Movement denied having made any non-compliant transfer arrangements with third parties. However, the confusion of information and structural defects exposed by the incident still make the impression of 'insider trading' difficult to eliminate completely.
Star Layer 2 project embroiled in controversy, multiple parties blame each other behind the Rentech agreement.
Movement is an Ethereum Layer 2 network built on Facebook's open-source language Move, which has rapidly become one of the most discussed emerging projects in the crypto industry in recent years due to its technological innovation and capital support.
The project was founded by two 22-year-old dropouts from Vanderbilt University, Rushi Manche and Cooper Scanlon, and has raised $38 million. It was included in a crypto investment portfolio supported by Trump-backed World Liberty Financial. In January 2025, Reuters reported that Movement Labs was about to complete a new round of financing of up to $100 million, which may reach a valuation of $3 billion.
However, there are clear divisions within the project regarding the controversial market-making agreement reached with Rentech. CoinDesk interviewed more than a dozen sources familiar with the project's internal affairs (most requested anonymity), and they provided various contradictory statements.
Galen Law-Kun, the owner of Rentech, denied any misleading behavior and stated that the transaction structure was designed in coordination with Movement Foundation's general legal advisor YK Pek. However, internal memoranda and communication records reviewed by CoinDesk show that Pek initially strongly opposed the agreement and denied participating in the establishment process of Rentech.
Movement Labs co-founder Scanlon stated in an internal Slack message: 'Movement is the victim in this incident.' This statement also marks the project party's attempt to shift responsibility to external operators.
According to four anonymous sources familiar with the internal investigation progress, Movement is focusing on reviewing its co-founder Rushi Manche's role in the Rentech agreement. It is said that Manche was the one who initially forwarded this agreement to the internal team and pushed for its implementation within the organization.
Sam Thapaliya, also included in the investigation, is the founder of the crypto payment protocol Zebec and a business partner of Rentech owner Galen Law-Kun. Although Thapaliya does not hold a formal position in Movement, he has long participated in key affairs as an 'informal advisor,' and his specific influence in this incident has also become a focus of internal audit.
Rejected before signing, Movement bypassed prudent mechanisms to accept high-risk agreements, raising questions about its governance structure.
Despite initially rejecting the high-risk market-making agreement with Rentech, Movement ultimately signed a modified agreement with a similar structure, relying on an oral guarantee from an intermediary with almost no public background.
Behind this decision is the highlight of the current shortcomings in the governance structure of the crypto industry. According to common practices, to avoid securities regulatory risks, crypto projects often split operations into two entities: one is a nonprofit foundation responsible for token management and community resource allocation, while the other is a profit-oriented development company responsible for underlying technology development. Movement Labs is the development entity of the project, while Movement Foundation is responsible for token affairs.
However, internal communication materials reviewed by CoinDesk indicate that the structure, which should have operated independently, actually failed in the Movement case. Co-founder Rushi Manche, although nominally an employee of Movement Labs, played a leading role in key affairs of the nonprofit foundation. This overlap of functions led to the dual-entity mechanism, which should have prevented compliance risks, losing its necessary checks and balances.
On March 28, 2025, co-founder Rushi Manche sent a draft market-making agreement to the Movement Foundation via Telegram, stating that the contract 'needs to be signed as soon as possible.'
On November 27, 2024, Rentech proposed a draft market-making agreement to Movement, which included lending up to 5% of the total amount of MOVE tokens to Rentech. According to the contract, Rentech is the borrower, and Movement is the lender. However, this agreement was ultimately not signed.
As a company with almost no public background and on-chain records, Rentech's large token lending request immediately raised alarms within the foundation. Movement Foundation's legal advisor YK Pek stated in an email that the document 'might be the worst agreement I've ever seen.' He further pointed out in another memorandum that if executed, the agreement would effectively transfer substantial control over the MOVE market to an externally ambiguous entity.
Additionally, Marc Piano, a director registered in the British Virgin Islands, also refused to sign the agreement. These various objections indicate that there was a clear awareness of the risks of the agreement within Movement, yet it still failed to prevent the agreement from being implemented in a modified form, further exposing the issue of governance failure.
One particularly striking clause in the contract stipulates that once the fully diluted valuation (FDV) of MOVE tokens exceeds $5 billion, Rentech can begin liquidating its held tokens and share the profits generated with Movement Foundation on a 50:50 basis.
Veteran in the crypto industry Zaki Manian pointed out that this structure essentially created a 'distorted incentive mechanism' that encourages market makers to artificially inflate the price of MOVE, allowing them to concentrate sell their massive holdings to extract profits when the valuation is inflated. This design not only deviated from the original intention of market making, which should serve price stability, but may also directly harm the interests of retail investors.
Although Movement Foundation initially rejected the high-risk market-making agreement, negotiations with Rentech did not cease. According to three informed sources interviewed by CoinDesk and legal documents reviewed, Rentech subsequently claimed to the foundation that it was a subsidiary of the Chinese market-making institution Web3Port and proactively offered to provide $60 million in collateral, which increased the attractiveness of the agreement.
Under the aforementioned conditions, the Movement Foundation accepted a revised agreement on December 8, 2025. This version made modifications to some key terms, removing one of the most controversial contents—if MOVE tokens failed to be listed on a specific exchange, Web3Port could sue Movement Foundation for compensation.
Although the agreement was adjusted in form, this compromise decision indicates that the foundation relaxed its risk prevention stance in the face of multiple pressures and incentives, ultimately laying hidden risks for subsequent events.
On December 8, 2025, the Movement Foundation formally signed the revised market-making agreement with Rentech. Although Rentech was explicitly marked as 'Web3Port' in the agreement (the name has been redacted in some documents), its identity as the borrower remained unchanged, while the foundation continued to be the lender.
It is noteworthy that the main drafter of the agreement was YK Pek, the foundation's legal advisor, who had previously clearly opposed the initial version of the agreement. Although the revised version removed some of the most controversial terms, the core structure remained unchanged: Web3Port could still borrow 5% of the total supply of MOVE tokens and sell them in certain ways to achieve profits.
Further technical information reveals the intentionality behind the operations of the agreement—the domain name 'web3portrentech.io' registered under Rentech's director's email was only completed on the day the agreement was signed.
Was the agreement already a 'done deal'? Web3Port secretly signed with 'Movement', and the foundation only learned about it afterward.
According to three people close to the incident, when the Movement Foundation signed the formal agreement on December 8, 2025, it was unaware that Web3Port had already signed a similar cooperation agreement with the nominal 'Movement' weeks earlier.
This 'preliminary agreement' not only bypassed the foundation's formal process but also circumvented necessary compliance reviews and governance mechanisms.
According to a contract obtained by CoinDesk dated November 25, 2025, Web3Port had already signed a highly similar market-making agreement with Rentech before the Movement Foundation officially signed. In this agreement, Rentech was marked as the lender, and Web3Port as the borrower, with Rentech directly referred to as the representative of 'Movement' in the document.
This 'shadow agreement' almost replicated the content of the original proposal that the foundation later rejected, indicating that some key arrangements had already been implemented through informal channels and had not undergone the foundation's approval process. This finding confirms the existence of multiple 'power channels' within the project.
This early agreement signed on November 25 is structurally very similar to the contract that was rejected on November 27, with core terms still clearly allowing market makers to conduct liquidation operations when the price of MOVE tokens reaches a specific threshold.
This setup is viewed by industry insiders like Zaki Manian as a core mechanism 'with high manipulation risk'—that is, artificially pushing prices to meet targets before concentrated selling to extract profits. This indicates that even in the subsequent version that superficially amended terms, some key stakeholders behind the project continued to push for an operation path with built-in arbitrage incentives, without substantively removing fundamental risks.
'Shadow co-founder'? Behind-the-scenes figures emerge, Zebec founder is accused of deep involvement in agreement structural design.
Multiple sources close to the Movement project revealed to CoinDesk that there are still many speculations about the true orchestrators of the Rentech agreement. This agreement, believed to have directly led to the mass sell-off of MOVE tokens in December and a public outcry, was initially circulated internally by co-founder Rushi Manche and pushed by him into the decision-making process.
According to Blockworks, Manche was suspended last week due to involvement in the agreement. Manche responded that throughout the process of selecting market makers, MVMT Labs had always relied on the foundation's team and several advisors for advice and assistance, 'but it now appears that at least one member of the foundation represented the interests of both parties in the agreement, which has become the focus of our current investigation.'
Meanwhile, another key figure Sam Thapaliya has also attracted significant attention. Thapaliya is the founder of the crypto payment protocol Zebec, and a long-term advisor to Manche and co-founder Scanlon. He was copied on multiple emails exchanged between Web3Port and Movement and appeared in important communication circles alongside Rentech and Manche.
This clue reinforces suspicions about Thapaliya's possible role as a 'behind-the-scenes operator' in the Rentech structural design—he may not just be a simple advisor but rather a 'shadow co-founder' who leads the agreement structure and deeply intervenes in decision-making.
Several Movement employees revealed that Zebec founder Sam Thapaliya may play a role in the project that far exceeds his advisory identity. Some referred to him as 'Rushi (Manche)'s close advisor, a sort of shadow third co-founder,' and pointed out: 'Rushi has always been vague about this relationship; we typically only hear his name occasionally.'
Another employee stated: 'Many times we have reached an agreement on a matter, but last-minute changes always occur, and at such times we usually know that it might be Sam's opinion.'
According to three witnesses, Thapaliya was present at Movement's office in San Francisco on the day MOVE tokens were launched to the public. CoinDesk also reviewed multiple Telegram screenshots showing that co-founder Scanlon had commissioned Thapaliya to assist in screening the MOVE airdrop list—this is a highly sensitive part of the project's community token distribution mechanism.
Such arrangements further deepened some team members' impression: Thapaliya's actual influence in the project was far deeper and more hidden than his public identity suggested. In response to CoinDesk, Thapaliya stated that he met Manche and Scanlon during his university years and has since participated in the project as an external advisor, but he 'does not hold shares in Movement Labs, has not received tokens from Movement Foundation, and has no decision-making power.'
Who is Rentech? The mysterious intermediary is embroiled in tangled relationships, with the founder and the project's legal advisors blaming each other.
At the center of the MOVE token controversy is Rentech, founded by Galen Law-Kun—who is a business partner of Zebec founder Sam Thapaliya. Law-Kun told CoinDesk that Rentech is a subsidiary of his financial services company Autonomy registered in Singapore, aiming to bridge financing between crypto projects and Asian family offices.
Law-Kun claimed that Movement Foundation's general legal advisor YK Pek not only assisted in establishing Autonomy SG but also served as the general legal advisor for Rentech (or its affiliated companies). He also stated that although Pek strongly opposed the Rentech agreement internally, he had actually assisted in designing the structure of Rentech and participated in drafting the initial version of the market-making agreement, 'the content of which was almost consistent with the contract version he later formally drafted for the foundation.'
However, CoinDesk's investigation did not find direct evidence of Pek serving in Autonomy or drafting any contracts related to Rentech in that capacity.
In response, Pek stated: 'I have never been, nor am I the chief legal advisor to Galen or any of his entities.' He explained that a corporate secretarial service company he co-founded did provide secretarial services for two companies under Galen, but those companies were not Rentech, and they both declared 'no assets' in their 2025 annual audits.
Pek further stated that he had spent two hours reviewing the advisory agreement between Galen and a certain project in 2024, and only provided free advice on the FTX case deadline and NDA documents. 'I completely do not understand why Galen would claim I am his chief advisor; this confuses and disturbs me.'
Pek also pointed out that the legal teams of Movement Foundation and Movement Labs learned about the lawyers hired by Rentech, GS Legal, through co-founder Rushi Manche.
According to Galen, Pek was introduced as an 'Autonomy legal advisor' to 10 different projects and has never denied this title; as for the involvement of GS Legal, it was 'only a formal process completed at the request of Movement.'
After the incident exploded, Movement Labs co-founder Cooper Scanlon emphasized in an internal Slack announcement that the company has hired external auditing firm Groom Lake to conduct an independent third-party investigation into the irregularities in the recent market-making arrangements. He reiterated: 'Movement is the victim in this incident.'
This series of mutual denials and accusations exposes the complex interpersonal and legal relationships behind Rentech and further pushes the MOVE incident from a market event to the core vortex of trust crisis and governance fracture.
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