Unveiling the Movement Maker's Market Maker Dumping Scandal: Secret Contract, Shadow Advisor, and Hidden Intermediary

Original Article Title: Inside Movement's Token-Dump Scandal: Secret Contracts, Shadow Advisers and Hidden Middlemen

Original Article Author: Sam Kessler, CoinDesk

Original Article Translation: Aki Chen, Wu Shuo Blockchain

Layer 2 blockchain project Movement Labs is reportedly investigating a fraudulent liquidity protocol incident. What was originally intended to facilitate the smooth listing of the MOVE cryptocurrency token has turned into a market-shaking dumping scandal. The protocol allegedly, without full knowledge of the project team, handed over control of 66 million MOVE tokens to a shadowy intermediary entity called Rentech. Rentech, in the protocol, purportedly acted as both the "Web3Port subsidiary" and the "Foundation agent," engaging in self-trades. This arrangement directly triggered a $38 million token dump the day after MOVE's listing, causing a significant price drop and leading to a Binance ban.

Despite internal objections to the protocol, senior management still pushed for its signing, raising serious concerns about governance failures, lack of due diligence, and conflicts of interest. Currently, multiple executives and legal advisors are under scrutiny, and the project's governance structure and partnership mechanisms are being thoroughly questioned. This crisis has revealed deep-seated flaws in Movement's institutional design, risk control, and compliance capabilities, potentially causing long-term damage to its future reputation and ecosystem development.

MOVE Token Plummets on Listing, Movement Labs Suspected of Misguided High-Risk Protocol Signing

According to internal documents reviewed by CoinDesk, Movement Labs, the blockchain project behind the MOVE cryptocurrency token, is conducting an internal investigation into a contentious financial protocol. This protocol may have granted significant control over the token market to a single entity without full knowledge of the project team, causing structural imbalance.

The protocol directly resulted in the concentrated dumping of 66 million MOVE tokens on December 9, 2025, the day after the token's exchange listing, triggering a cliff-like price drop and raising widespread questions about "internal trading" and rent-seeking. Of note, the MOVE project received a public endorsement from the Trump-backed crypto venture fund World Liberty Financial, adding political and industry influence to the event.

Movement Labs Co-Founder Cooper Scanlon announced in an internal Slack message on April 21 that the team is investigating a critical issue: how over 5% of the MOVE token originally allocated for liquidity provider Web3Port was transferred to an intermediary entity named Rentech.

Reportedly, the Movement Foundation was initially informed that Rentech was a subsidiary of Web3Port, but the investigation revealed otherwise. Rentech, on the other hand, denies any misleading behavior.

Rentech Holds Unilateral Control Over Nearly Half of the Circulating Supply, Resulting in Imbalance in MOVE Token Circulation

According to an internal memo from the Movement Foundation, the agreement between Movement and Rentech lent a portion equivalent to half of the MOVE token's circulating supply to this single counterparty. This arrangement granted Rentech an unusually significant market influence at the early stages of the token listing.

Several interviewed industry experts have pointed out that this centralized structure deviates significantly from the decentralized distribution principle typically pursued by crypto projects, making it vulnerable to price manipulation or one-sided arbitrage.

Upon reviewing a version of the contract obtained by CoinDesk, veteran crypto industry founder Zaki Manian noted that certain terms in the agreement effectively set an incentive for "pumping up the MOVE token's fully diluted valuation to over $5 billion before dumping on retail." He bluntly stated, "Even the discussion of such tactics in a written document is alarming." This comment further deepened external skepticism regarding Rentech's intentions and ethical boundaries in the agreement.

In theory, a liquidity provider is engaged by the project to provide liquidity services for a newly listed token, with the responsibility to facilitate buying and selling within an exchange using funds provided by the project to maintain price stability and market depth. However, in practice, this role also carries abuse risks.

In the absence of regulation or transparency in the agreement, a liquidity provider may become a tool for insiders to manipulate the market and surreptitiously shift significant token holdings, evading detection from external parties and severely compromising the interests of retail investors and market fairness.

Contract Exposure Reveals Crypto Gray Areas: How Public Projects Turn into Few People's Arbitrage Tools in a Regulatory Vacuum

A series of contract documents obtained by CoinDesk has 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 are very easily used as a vehicle for a small group of individuals behind the scenes to profit.

The contents of these agreements show that once a project team is negligent in structural design and compliance oversight, so-called "decentralized" projects may also be completely privatized by a few operators through unequal terms, deviating from the original intent of fairness and openness.

In the crypto market, rumors of manipulation and abuse surrounding market-making mechanisms have long been heard, but the specific details of such operations, contract structures, and benefit arrangements are rarely brought to light. As a result, the internal contract and agreement details disclosed by Movement Labs in this incident have become a rare window to observe the black box operation and gray market-making space of Web3 projects, once again bringing the industry's focus back to the most basic yet often overlooked principle of "transparency."

The market-making contract reviewed by CoinDesk shows that Rentech appeared in the transaction with Movement Foundation in two capacities at the same time: on the one hand, as an agent of Movement Foundation, and on the other hand, it signed the agreement as a subsidiary of Web3Port. This structure provided Rentech with the possibility to take on the "intermediary dominance" in the transaction, theoretically allowing it to set transaction terms on its own and profit from it under information asymmetry.

The market-making agreement reached between Movement and Rentech eventually 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 the crypto fund World Liberty Financial associated with Donald Trump. These wallets quickly liquidated approximately $38 million worth of tokens on the day after the MOVE token was first issued on the exchange, causing a sharp market fluctuation and raising concentrated doubts about the motives and legitimacy of the agreement arrangement itself.

Binance Bans Market-Making Account for "Irregular Behavior," Movement Initiates Emergency Token Buyback

In the wake of the incident, the major exchange Binance has banned the involved market-making account for "improper behavior." Meanwhile, the Movement project team urgently announced the initiation of a token buyback plan in an attempt to stabilize market sentiment and regain community trust.

Similar to startup employee stock options, most cryptocurrency projects set a lock-up period during token distribution to restrict the core team, investors, and early contributors from selling off a large portion of their holdings in the initial stages of the project.

This mechanism is intended to protect market stability and prevent insiders from taking advantage of information asymmetry to profit early. However, in the Movement event, the bypassing of lock-up restrictions in token flows was precisely the core issue that sparked external scrutiny.

Binance's action to freeze the involved accounts quickly prompted speculations in the community, with many observers suggesting that this might indicate a prior agreement between Movement project insiders and Web3Port to circumvent the standard lock-up mechanism for early token sales.

In response to this scrutiny, the Movement team denied any wrongdoing, asserting that they had not engaged in any illicit transfer arrangements with third parties. However, the information confusion and contract structure flaws exposed by this event still make it challenging to completely dispel the impression of "insider trading."

Star Layer 2 Project Embroiled in Controversy, Rentech Protocol Faces Mutual Accusations

Movement is an Ethereum scaling Layer 2 network built on the Facebook open-source Move language. Due to its technical innovation and capital backing, it has rapidly become one of the most discussed emerging projects in the cryptocurrency industry in recent years.

The project was founded by two only 22-year-old dropouts from Vanderbilt University, Rushi Manche and Cooper Scanlon, who raised $38 million in funding and was selected for the World Liberty Financial crypto investment portfolio backed by Trump. In January 2025, Reuters reported that Movement Labs was about to complete a new round of funding of up to $1 billion, with a valuation potentially reaching $30 billion.

However, significant internal disagreements emerged within the project surrounding the controversial market-making agreement with Rentech. CoinDesk interviewed over a dozen sources familiar with the internal dynamics of the project (most requested anonymity), and they provided various contradictory accounts.

Rentech's owner, Galen Law-Kun, denied any misleading behavior and stated that the transaction structure was designed in coordination with YK Pek, the general counsel of the Movement Foundation. However, internal memos and communication records reviewed by CoinDesk indicate that Pek initially strongly opposed the agreement and denied involvement in Rentech's establishment process.

Movement Labs Co-Founder Scanlon stated in an internal Slack message, "Movement is a victim in this event." This statement also signifies that the project team is attempting to shift responsibility towards an external operator.

According to four anonymous sources familiar with the progress of the internal investigation, Movement is actively reviewing the role of its co-founder Rushi Manche in the Rentech agreement. It is alleged that Manche initially forwarded the agreement to the team and advocated for the collaboration within the organization.

Also under investigation is Sam Thapaliya — the founder of the crypto payment protocol Zebec and a business partner of Rentech owner Galen Law-Kun. While Thapaliya did not hold a formal position at Movement, he had long been involved in core affairs in an "informal advisory" capacity, making his specific influence in this event a key focus of the project's internal audit.

Reject-Then-Accept Approach, Movement Bypasses Due Diligence Mechanisms, Governance Structure Questioned

Despite initially vetoing a significant risk associated with the market-making agreement with Rentech, Movement eventually signed a structurally similar revised version of the agreement. The core reliance of the agreement was based on an oral assurance from an intermediary with almost no public track record.

Behind this decision lies a spotlight on the governance shortcomings in the current crypto industry. As per common practices, to mitigate securities regulatory risks, crypto projects usually split operations into two entities: one managed by a non-profit foundation responsible for token management and community resource allocation, and another being the for-profit development company in charge of core technical development. Movement Labs serves as the project's development entity, while Movement Foundation is responsible for token affairs.

However, internal communication materials reviewed by CoinDesk show that the initially intended independently operating structure failed in the Movement case. Co-Founder Rushi Manche, while nominally an employee of Movement Labs, played a leading role in critical matters of the non-profit foundation. This overlap in roles undermined the dual-entity mechanism that was supposed to mitigate compliance risks.

On March 28, 2025, Co-Founder Rushi Manche sent a draft market-making agreement to Movement Foundation via Telegram, stating that the contract "needs to be signed as soon as possible."

On November 27, 2024, Rentech submitted a market-making agreement draft to Movement, which included lending up to 5% of the total MOVE token supply to Rentech. According to the contract, Rentech was the borrower, and Movement was the lender. However, this agreement was ultimately not signed.

Rentech, being a company with almost no public background or on-chain records, immediately triggered internal alert within the Foundation with its significant token borrowing request. Movement Foundation's legal counsel, YK Pek, bluntly stated in an email that the document was "possibly the worst agreement I've ever seen." In another memorandum, he further pointed out that if executed, the agreement would amount to handing over substantial control of the MOVE market to a vaguely identified external entity.

Additionally, Marc Piano, a director of the Foundation registered in the British Virgin Islands, also refused to sign the agreement. The various objections mentioned above show that internal awareness of the risks of this agreement within Movement was actually very clear; however, it failed to prevent the agreement from proceeding in a modified form in subsequent processes, further exposing governance failures.

One particularly notable clause in the contract stated that once the Fully Diluted Valuation (FDV) of the MOVE token exceeded $5 billion, Rentech could begin liquidating its held tokens and share the resulting profits with Movement Foundation on a 50:50 basis.

Cryptocurrency industry veteran Zaki Manian pointed out that this structure essentially created a "perverse incentive mechanism," encouraging the market maker to artificially pump the MOVE price to concentrate its large holdings for profit-taking when the valuation is inflated. This design not only deviates from the original purpose of market-making to serve price stability but also could directly harm retail investors' interests.

Although Movement Foundation initially refused to sign the high-risk market-making agreement, its negotiations with Rentech did not cease. According to three sources interviewed by CoinDesk and legal documents reviewed, Rentech later claimed to the Foundation that it was a subsidiary of the Chinese market-making institution Web3Port and voluntarily offered to provide $60 million in collateral, thereby increasing the agreement's attractiveness.

Under the above conditions, Movement Foundation accepted a revised agreement on December 8, 2025. This version made modifications to some key terms, removing one of the original most contentious clauses — the right for Web3Port to sue Movement Foundation for compensation if the MOVE token failed to list on a specific exchange.

Despite some formal adjustments to the protocol, this compromise decision indicates that the foundation has relaxed its risk mitigation stance in the face of multiple pressures and incentives, ultimately laying the groundwork for subsequent events.

On December 8, 2025, the Movement Foundation and Rentech officially signed the revised liquidity provision agreement. Although Rentech is explicitly labeled as "Web3Port" in the agreement (the name has been redacted in some documents), in essence, its role as the borrower remains unchanged, with the foundation still being the lender.

Of note is that the main drafter of this agreement is none other than the foundation's legal counsel, YK Pek, who had previously expressed clear opposition to the initial version of the agreement. Despite the removal of some of the most contentious clauses in the revised version, the core structure remains unchanged: Web3Port can still borrow up to 5% of the MOVE token's total supply and can sell in a certain manner to realize profits.

Further technical details reveal the deliberate nature of the operations behind the agreement—the domain name "web3portrentech.io" registered under Rentech's director's email was only registered on the day the agreement was signed.

Was the agreement already a done deal? Web3Port and "Movement" secretly signed a contract, with the foundation only finding out later

According to three sources close to the event, when the Movement Foundation formally signed the agreement on December 8, 2025, they were unaware that Web3Port had already, weeks prior, signed a similar cooperation agreement with the nominal "Movement."

This "preliminary agreement" not only bypassed the foundation's formal processes but also circumvented the required compliance review and governance mechanisms.

Based on a contract dated November 25, 2025, obtained by CoinDesk, Web3Port had already signed a highly similar liquidity provision agreement with Rentech before the official signing with the Movement Foundation. In this agreement, Rentech was identified as the lender, Web3Port as the borrower, and Rentech was directly referred to as the representative of "Movement" in the document.

This "shadow agreement" nearly replicated the original proposal that the foundation later rejected, indicating that some key arrangements had already been established through informal channels without going through the foundation's approval process. This discovery confirms the existence of multiple "power channels" within the project.

The early agreement signed on November 25, structurally similar to the contract rejected on November 27, still explicitly allows market makers to carry out liquidation operations when the MOVE token price reaches a specific threshold.

This setting, considered by industry figures like Zaki Manian to be a "highly manipulative risk," is a core mechanism where manipulation could occur through orchestrated price movements followed by concentrated selling to profit from it. This indicates that even in subsequent versions apparently modified on the surface, some key stakeholders behind the project continue to drive a path of operation with inherent arbitrage incentives without substantively addressing the fundamental risk.

"Shadow Co-Founder"? Behind-the-Scenes Operator Emerges, Zebec Founder Allegedly Deeply Involved in Protocol Design

Multiple sources close to the Movement project revealed to CoinDesk that there are still many speculations about the true mastermind of the Rentech protocol. The agreement, which was directly linked to the massive December sell-off of the MOVE token and a public relations storm, had its initial version circulated internally by co-founder Rushi Manche and was actively promoted by him in the decision-making process.

According to Blockworks, Manche was briefly suspended last week due to his involvement in the protocol. Manche himself responded, stating that MVMT Labs has always relied on the Foundation team and multiple advisors for advice and assistance in selecting market makers, but "it now appears that at least one Foundation member represented the interests of both sides of the agreement, which has become a focal point of our current investigation."

Simultaneously, another key figure, Sam Thapaliya, has also attracted significant attention. Thapaliya is the founder of the crypto payment protocol Zebec and has long been an advisor to Manche and co-founder Scanlon. He was cc'd on multiple emails exchanged between Web3Port and Movement, appearing alongside Rentech, Manche, in crucial communications.

This clue reinforces external suspicions that Thapaliya may have played a "behind-the-scenes orchestrator" role in Rentech's design - not merely an advisor but rather the driving force behind the protocol's structure and deeply involved in decision-making as a "shadow co-founder."

According to several Movement employees, Zebec founder Sam Thapaliya may be playing a role within the project far beyond his advisory capacity. Some have referred to him as "Rushi's (Manche) close advisor, a sort of shadow third co-founder," and pointed out: "Rushi has always been secretive about this relationship, and we usually only hear about him occasionally."

Another employee, on the other hand, stated, "Many times we have reached consensus on a certain matter, but at the last moment there is always a change, and at such times we usually know that it might be Sam's opinion."

According to three eyewitnesses, Thapaliya appeared at Movement's San Francisco office on the day the MOVE token was launched to the public. CoinDesk also reviewed multiple Telegram screenshots showing co-founder Scanlon had entrusted Thapaliya to assist in screening the MOVE airdrop list—a highly sensitive part of the project's community token distribution mechanism.

Such arrangements further deepened the impression of some team members: Thapaliya's actual influence in the project is far deeper and more covert than his public persona suggests. In response to this, Thapaliya told CoinDesk that he had met Manche and Scanlon during his university years and had since been involved in the project as an external advisor, but he "does not hold any shares in Movement Labs, has not received tokens from the Movement Foundation, and does not have any decision-making power."

Who Is Rentech? Behind the Veil of Mystery, Founder and Project Legal Advisor Point Fingers at Each Other

At the heart of the MOVE token controversy is Rentech, founded by Galen Law-Kun—a business partner of Zebec founder Sam Thapaliya. Law-Kun told CoinDesk that Rentech is a subsidiary of his Singapore-registered financial services company Autonomy, aimed at bridging financing for crypto projects and Asian family offices.

Law-Kun claimed that YK Pek, the Movement Foundation's general legal counsel, not only assisted in setting up Autonomy SG but was also the legal counsel for the company (or its affiliates) Rentech. He also stated that despite Pek's strong internal opposition to the Rentech agreement, he himself had actually helped design Rentech's structure and participated in drafting the initial version of the liquidity agreement, "the contents of which were almost identical to the formal contract version he later drafted for the foundation."

However, CoinDesk's investigation did not find direct evidence of Pek working at Autonomy or in that capacity drafting any contracts related to Rentech.

In response to this, Pek stated, "I have never been, nor have I ever been the legal counsel for Galen or any of its entities." He explained that a corporate secretarial services company he co-founded did provide secretarial services to two companies under Galen, but these two companies were not Rentech, and they both declared "no assets" in their 2025 annual audit.

Pek further stated that he had spent two hours reviewing an advisory agreement between Galen and a certain project in 2024, and only provided free advice on the FTX case deadline and NDA documents. "I have no idea why Galen would claim that I am his general counsel, which leaves me confused and unsettled."

Pek also pointed out that the legal teams of Movement Foundation and Movement Labs were introduced to the lawyer hired by Rentech, GS Legal, through co-founder Rushi Manche.

On the other hand, according to Galen, Pek had been introduced to 10 different projects as the "Autonomy legal advisor" and did not deny this title. Regarding GS Legal's involvement, it was "a formal process completed only at Movement's request."

Following the incident, Movement Labs co-founder Cooper Scanlon emphasized in an internal Slack announcement that the company had engaged an external audit firm, Groom Lake, to conduct a third-party independent investigation into the recent anomalies in the liquidity arrangements. He reiterated, "Movement is a victim in this incident."

This series of mutual denials and accusations has exposed the intricate interpersonal and legal relationships behind Rentech and has further propelled the MOVE saga from a market event into the core maelstrom of trust crisis and governance rift.

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