Movement Labs has filed for Chapter 11 bankruptcy in the U.S., a dramatic turn for the blockchain startup after months of token controversy, governance disputes, and a failed strategic reset. The company is reportedly using Subchapter V, a streamlined process for smaller businesses, which would let it keep operating while it restructures its debts under court supervision.

Movement Labs files for bankruptcy

Movement Labs, the developer behind the Movement blockchain, filed in the U.S. Bankruptcy Court for the District of Delaware. The filing is being described as one of the biggest setbacks yet for a project that once aimed to build a high-profile Ethereum Layer 2 network and later pivoted toward payments and stablecoins. According to the reports, the company listed fewer than 1,000 creditors, estimated assets of between $100,000 and $500,000, and liabilities above $1 million. That gap suggests a severe balance-sheet strain, even before considering the reputational damage from the token controversy.

What went wrong

The collapse traces back to the MOVE token launch in December 2024, when a controversial market-making arrangement reportedly allowed 66 million MOVE tokens to be sold just one day after debut. That episode triggered a steep price drop, internal investigations, and a broader credibility crisis around the project’s leadership and controls. The company later faced fallout tied to Binance’s action against a linked market-making account and launched a buyback program, but the damage had already spread through the market. One report also notes that co-founder Rushi Manche left the company in May 2025 and later sued the startup in Delaware.

Latest financial context

The bankruptcy comes after a turbulent stretch in which Movement Labs tried to reposition itself beyond the original layer-2 pitch. In June 2026, the separate entity Move Industries said it would focus on cross-border payments, remittances, and stablecoin settlement across the U.S., Canada, and the EU. That strategic shift showed the team was trying to salvage value from the ecosystem, but the Chapter 11 filing now puts that roadmap in doubt. The filing also highlights how quickly sentiment can reverse in crypto when token structure, governance, and execution all come under pressure.

Why it matters

For investors and token holders, the filing raises fresh uncertainty over the future of the Movement project and any remaining commercial partnerships. For the broader crypto sector, it is another reminder that fundraising alone does not guarantee resilience if adoption, trust, and operational discipline are weak. The case may also become a reference point for how token launches, market-making deals, and internal controls are scrutinized in future Web3 projects. In short, Movement Labs’ bankruptcy is not just a financial event; it is a governance story with long-tail consequences.