Uncovering the Movement Market Maker Dumping Scandal: Secret Contracts, Shadow Advisors, and Hidden Intermediaries

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

Original Author: Sam Kessler, CoinDesk

Original Translation: Aki Chen, Wu Shuo Blockchain

Layer 2 blockchain project Movement Labs is reportedly investigating a fraudulent market-making protocol incident. What was initially intended to facilitate the smooth listing of the MOVE token has turned into a market-shaking token-dump scandal. The protocol allegedly, without full knowledge of the project team, transferred control of 66 million MOVE tokens to a shadowy intermediary entity, Rentech. Rentech, in the protocol, played a dual role as both a "Web3Port subsidiary" and a "Foundation agent," suspected of self-dealing. This arrangement directly led to a $38 million token sell-off frenzy on the day following MOVE's listing, causing a significant price drop and resulting in a Binance ban.

Despite internal opposition to the protocol, 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 collaboration mechanisms are being fully questioned. This crisis has exposed deep-seated flaws in Movement's institutional design, risk control, and compliance capabilities, potentially causing long-term impacts on its reputation and ecosystem development.

MOVE Token Plunges Upon Listing, Movement Labs Suspected of Misguided High-Risk Protocol Signing

Internal documents reviewed by CoinDesk reveal that Movement Labs, the blockchain project behind the MOVE cryptocurrency token, is conducting an internal investigation into a controversial financial agreement. This agreement may have, without full knowledge of the project team, granted significant control of the token's market to a single entity, resulting in structural imbalance.

This agreement directly caused 66 million MOVE tokens to be massively dumped on the exchange the day after listing on December 9, 2024, triggering a cliff-like price drop and sparking widespread skepticism about "internal trading" and rent-seeking. It is worth noting that the MOVE project had received a public endorsement from the Trump-backed crypto venture fund World Liberty Financial, adding political and industry influence to this event.

Movement Labs Co-Founder Cooper Scanlon announced in an internal Slack post on April 21 that the team is investigating a key 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 Unilaterally Controls Nearly Half of the Circulating Supply, Causing an Imbalance in MOVE Token Circulation

According to an internal memo from the Movement Foundation, an agreement between Movement and Rentech lent out a share amounting to half of the MOVE token's total circulating supply to this single counterparty. This arrangement granted Rentech an unusually strong market influence early in the token's listing.

Several industry experts interviewed highlighted that this centralized structure starkly deviates from the decentralization distribution principle that cryptocurrency projects typically strive for, making it highly susceptible to price manipulation or one-sided arbitrage.

Upon reviewing a version of the contract obtained by CoinDesk, veteran crypto industry founder Zaki Manian pointed out that certain terms in the agreement essentially set clear incentives for "pumping the MOVE token fully diluted valuation (FDV) to over $5 billion and then dumping on retail for profits."

He bluntly stated, "Even the mere discussion of such strategies in a written document is already alarming." This commentary further fuelled external doubts regarding the purpose and ethical boundaries of the Rentech agreement.

In theory, liquidity providers are engaged by project teams to provide liquidity services for newly launched tokens, with the responsibility of trading within exchanges using funds provided by the project to maintain price stability and market depth. However, in practice, this role also carries risks of abuse.

In the absence of regulation or transparency in agreements, liquidity providers may become tools for insiders to manipulate markets and stealthily transfer large token holdings, evading detection by outsiders and severely compromising the interests of retail investors and market fairness.

Contract Exposure Reveals Crypto Gray Areas: How Public Projects Turn into a Few People's Arbitrage Tool 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 intended for the public are easily exploited as a vehicle for a small group behind the scenes to seek personal gain.

The content of these agreements shows that once project teams are 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 ideals of fairness and openness.

In the crypto market, manipulation and abuse around the market-making mechanism have long been rumored, but the specific details of such operations, contract structures, and incentive arrangements are rarely brought to light. Therefore, the internal contract and agreement details disclosed in the Movement Labs incident have become a rare window into observing the black box operation and market-making gray area of Web3 projects, once again focusing the industry on the most fundamental yet often overlooked principle of "transparency."

Review of the market-making contract by CoinDesk shows that Rentech appeared in the transaction with the Movement Foundation in two capacities simultaneously: on the one hand, as an agent of the Movement Foundation, and on the other hand, it signed the agreement as a subsidiary of Web3Port. This structure potentially allows Rentech to exercise "intermediary dominance" in the transaction, theoretically enabling it to set transaction terms on its own and profit from them under asymmetric information.

The market-making agreement reached between Movement and Rentech ultimately opened a selling channel for a group of wallets associated with Web3Port. The Chinese financial institution claimed to have previously served MyShell, GoPlus Security, and the crypto fund World Liberty Financial associated with Donald Trump. These wallets swiftly liquidated approximately $38 million worth of tokens on the day following the initial exchange listing of the MOVE token, causing significant market volatility and raising concentrated questions about the motives and legitimacy of the agreement arrangement.

Binance Bans Market-Maker Account for "Misconduct," Movement Urgently Initiates Token Buyback

Following the escalation of the incident, leading exchange Binance has banned the implicated market-maker account, citing "misconduct." Meanwhile, the Movement project team has urgently announced the initiation of a token buyback plan in an attempt to stabilize market sentiment and restore community trust.

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

This mechanism is intended to protect market stability and prevent insiders from profiting early using information advantages. However, in the Movement event, the flow arrangements that allowed the tokens to bypass the lock-up restrictions are precisely the core issue that raised external scrutiny.

Binance's decision to ban the involved accounts quickly sparked speculations in the community, with many observers believing that it might indicate a private agreement between Movement project insiders and Web3Port to bypass the standard lock-up mechanism and sell tokens early.

In response to these speculations, the Movement team denied the allegations, insisting that they had not engaged in any improper transfer arrangements with third parties. Nevertheless, 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 Mired in Controversy, Rentech Protocol Faces Mutual Blame

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

The project was founded by two 22-year-old dropouts from Vanderbilt University, Rushi Manche and Cooper Scanlon. They raised $38 million in funding and were selected for the crypto investment portfolio of the 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 $1 billion, with a valuation possibly reaching $30 billion.

However, there has been a significant internal dispute within the project surrounding the controversial market-making agreement with Rentech. CoinDesk interviewed over a dozen sources familiar with the project's internal affairs (most requested anonymity), and they provided various conflicting accounts.

Rentech's owner, Galen Law-Kun, denied any misleading behavior and stated that the transaction structure was designed in coordination with the Movement Foundation's chief legal advisor, YK Pek. 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 currently focusing on reviewing its Co-Founder Rushi Manche's role in the Rentech agreement. Allegedly, Manche was the one who initially forwarded the agreement to the team internally 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's owner Galen Law-Kun. Although Thapaliya did not hold a formal position at Movement, he has long been involved in core affairs in an "informal advisory" capacity, making his specific influence in this event a focal point of the project's internal audit.

Refusal Initially, Movement Bypasses Due Diligence Mechanism to Accept High-Risk Agreement, Governance Structure Questioned

Despite initially rejecting a significant-risk market-making agreement with Rentech, Movement ultimately signed a structurally similar revised version of the agreement, with the core dependency of the agreement relying on an oral assurance from an intermediary with almost no public record.

This decision highlights a flaw in the current governance structure of the crypto industry. According to common practices, to mitigate securities regulatory risks, crypto projects usually split operations into two entities: a non-profit foundation responsible for token management and community resource allocation, and a for-profit development company responsible for core technical development. Movement Labs is the development entity of the project, while Movement Foundation is responsible for token affairs.

However, internal communications reviewed by CoinDesk show that the originally intended independent operation structure failed in the Movement case. Co-Founder Rushi Manche, while nominally an employee of Movement Labs, played a leading role in critical affairs of the non-profit foundation. This overlapping of roles has rendered the dual-entity mechanism, which was supposed to safeguard against compliance risks, without its intended checks and balances.

On March 28, 2024, Co-Founder Rushi Manche sent a draft market-making agreement to Movement Foundation via Telegram and stated that the contract "needs to be signed as soon as possible."

On November 27, 2024, Rentech presented a market-making agreement draft to Movement, including a proposal to lend up to 5% of the total MOVE token supply to Rentech. Per the contract, Rentech was the borrower, and Movement was the lender. However, this agreement was ultimately not signed.

As Rentech, a company with little to no public background or on-chain records, requested a substantial token loan, it immediately raised alarms within the Foundation. YK Pek, the legal counsel for the Movement Foundation, bluntly stated in an email that the document was "perhaps the worst agreement I've seen." In another memorandum, he further pointed out that if executed, the agreement would effectively hand over substantial control of the MOVE market to a vague external entity.

Furthermore, Marc Piano, a director of the Foundation registered in the British Virgin Islands, also refused to sign the agreement. The various objections mentioned above indicate that the Foundation's internal understanding of the risks associated with this agreement was crystal clear, yet they failed to stop the agreement from progressing in a modified form in subsequent processes, further exposing governance failures.

One particularly noteworthy provision 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 would share the resulting profits with the 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 selling their significant holdings when the valuation is inflated, thus profiting. 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 the Movement Foundation initially refused to sign 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 a Chinese market-making institution, Web3Port, and proactively offered to provide $60 million in collateral, thereby enhancing the agreement's appeal.

Under the above conditions, on December 8, 2024, the Movement Foundation accepted a revised version of the agreement. This version made modifications to some key terms, removing one of the originally most controversial aspects — the right for Web3Port to sue the 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 various pressures and incentives, ultimately laying the groundwork for subsequent events.

On December 8, 2024, the Movement Foundation and Rentech officially signed a revised version of the 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 has not changed, with the foundation still acting as the lender.

Of note, the agreement's main drafter is none other than the foundation's legal counsel, YK Pek, who had previously explicitly opposed the original version of the agreement. While some of the most controversial clauses have been removed in the revision, the core structure remains unchanged: Web3Port can still borrow 5% of the total MOVE token supply and liquidate in a certain manner to generate profits.

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

Was the Agreement Preempted? Web3Port Secretly Signed with "Movement," Foundation Only Informed Later

According to three sources familiar with the matter, when the Movement Foundation signed the formal agreement on December 8, 2024, it was not aware that Web3Port had already signed a similar cooperation agreement with the nominal "Movement" several weeks prior.

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

Based on a contract dated November 25, 2024, obtained by CoinDesk, Web3Port had already signed a highly similar liquidity provision agreement with Rentech before the Movement Foundation's official signing. 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 vetoed, indicating that some key arrangements had already been implemented 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 shares a high degree of similarity in structure with the contract that was rejected on November 27. The core terms still clearly allow market makers to carry out liquidation actions when the MOVE token price reaches a specific threshold.

This setting, deemed by industry insiders such as Zaki Manian as a mechanism with "extreme manipulation risk," involves artificially driving the price to a target and then engaging in concentrated selling to extract profits. This indicates that even in subsequent versions that appear to have been modified on the surface, some key stakeholders behind the project are still promoting a path of operation with built-in arbitrage incentives, without substantially mitigating the fundamental risks.

Shadow Co-Founder? Behind-the-Scenes Operator Emerges, Zebec Founder Implicated in Protocol Design

Multiple sources close to the Movement project have revealed to CoinDesk that there is still much speculation surrounding the true mastermind behind the Rentech protocol. The protocol, believed to directly cause the large-scale token dump of MOVE in December and a public relations storm, had its initial version circulated internally by co-founder Rushi Manche and he drove its inclusion in the decision-making process.

According to Blockworks, Manche was briefly suspended last week due to his involvement in the protocol. Manche himself responded that throughout the process of selecting market makers, MVMT Labs has always relied on advice and assistance from the foundation team and several advisors, "but it now appears that at least one foundation member simultaneously represented the interests of both sides of the protocol, which has become a focus of our current investigation."

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

This clue strengthens external suspicions that Thapaliya may have played a "behind-the-scenes orchestrator" role in the Rentech design — he may not just be a simple advisor, but rather the one driving the protocol's architecture and deeply influencing decision-making as a "shadow co-founder."

According to several employees of Movement, Zebec founder Sam Thapaliya may play a role within the project that far exceeds his advisory position. Some describe him as "Rushi's (Manche) intimate advisor, a quasi-shadow third co-founder," pointing out: "Rushi has always been secretive about this relationship, and we usually only occasionally hear his name."

Another employee said, "Many times we have already reached an agreement on a certain matter, but there is always a last-minute change, and at those 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 launched to the public. CoinDesk also reviewed multiple Telegram screenshots showing co-founder Scanlon entrusting 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 much deeper and more covert than his public persona suggests. In response to this, Thapaliya told CoinDesk that he met Manche and Scanlon during his early university years and has since been involved in the project as an external advisor, but he "does not hold any stock in Movement Labs, has not received tokens from the Movement Foundation, and does not have any decision-making power."

Who is Rentech? Behind the enigmatic intermediary, 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—who is 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, aiming to build a financing bridge between crypto projects and Asian family offices.

Law-Kun claims that YK Pek, the lead legal advisor for the Movement Foundation, not only assisted in establishing Autonomy SG but also served as the legal counsel for the company (or its affiliate) Rentech. He also stated that although Pek vehemently opposed the Rentech agreement internally, he himself actually helped design Rentech's structure and was involved in drafting the initial version of the liquidity agreement, "which was almost identical to the contract version he later formally 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, 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 audits.

Pek further stated that he had spent two hours reviewing an advisory agreement between Galen and a certain project in 2024, and had only provided free advice on the FTX case deadline and NDA documentation. "I completely do not understand why Galen would claim that I am his general counsel, this has left me confused and unsettled."

Pek also pointed out that the legal team of Movement Foundation and Movement Labs was introduced to GS Legal, the lawyer hired by Rentech, 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 had never denied this title; as for the involvement of GS Legal, it was "merely a formal process carried out at the request of Movement."

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 irregularities in the liquidity arrangements. He reiterated, "Movement is the victim in this incident."

This series of mutual denials and accusations has exposed the intricate interpersonal and legal relationships behind Rentech, further shifting the MOVE controversy from a market event to the core whirlpool of trust crisis and governance fracture.

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