Movement’s Rushi Manche faces suspension amid market maker controversy
MOVE is down 21% in the past day
Movement Labs co-founder Rushi Manche | Permissionless III by Mike Lawrence for Blockworks
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A lot has happened since I last wrote on Movement. At the time, the chain was not live.
About a month later, on April 15, Blockworks’ Katherine Ross and Jack Kubinec broke a story on market maker “misconduct” around the project’s MOVE token on the Binance exchange.
The market marker was alleged by ZachXBT to be linked to market making firm Web3Port. At the time, MOVE traded at $0.29, about 74% down from its highs of $1.12 in December.
Movement Labs co-founder Rushi Manche was also reportedly taking a “temporary leave” from the company, a claim that Manche neither explicitly affirmed nor denied at the time.
As of yesterday, Movement officially confirmed that Manche has been suspended “in light of ongoing events” regarding “organizational governance and recent incidents involving a market maker.”
The market maker in question was confirmed to be Web3Port in a CoinDesk exposé published on Wednesday.
The market maker reportedly sold 66 million MOVE tokens (worth $38 million and about 2.64% of the total circulating supply at the time) on Dec. 9, 2024 — the day of the token’s Binance listing. On Mar. 25, Binance banned the market maker engaged by Movement after it netted a profit of $38m.
In the aftermath of the Binance ban, Movement quickly condemned the market maker, citing that the firm’s actions were “against our wishes, without our consent, and in breach of our agreement.” Within the same blog post, Movement quickly announced a $38 m MOVE buyback program to “return the USDT liquidity to the Movement ecosystem.”
Coinbase exchange announced also today its decision to suspend trading on the MOVE token. MOVE has plummeted to $0.19, down about 21% in the last 24 hours.
The exposé
CoinDesk’s piece revealed that Web3Port had initially floated a contract with Movement Foundation that included a clause allowing the market maker to liquidate its MOVE positions on the condition that the token reached a $5 billion FDV, then shared profits on a 50-50 basis.
Movement initially pushed back against the contractual agreements. Yet, after some revisions, the resulting signed agreement retained the market maker’s ability to “sell tokens for a profit,” CoinDesk reported.
According to Movement Foundation’s general counsel YK Pek, the renegotiated agreement used a “variable interest” mechanism, where a portion of tokens would be loaned to Web3Port only when the token price exceeded a certain rate.
This was an improvement over the previous proposed clause that would not require the market maker to sell any tokens below a $5b FDV price. It helped to solve for the “incentive misalignment with a hard dump figure at 5bn,” Pek said in the X post.
Web3Port’s contract with Movement Foundation was brokered through Rentech, a questionable middleman entity that looks to be a Web3Port subsidiary.
The real controversy, Movement Foundation’s general counsel YK Pek said, was that the foundation was misled into entering an agreement under a false impression, rather than on the terms themselves.
Disclosure: Blockworks co-founder Jason Yanowitz is an angel investor in Movement Labs.
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