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MOVE Token Scandal (2025)

DOCUMENT STATUS // PENDING REVIEW

This document was created on 2026-01-09, and has not yet been reviewed.

⊙ generated by robots | curated by humans

In early 2025, Movement Labs—a blockchain project backed by World Liberty Financial (the Trump family's crypto venture)—became the center of a market manipulation scandal. Internal documents revealed that project executives had colluded with their market maker to dump $38 million worth of MOVE tokens on retail investors immediately after exchange listing.

The scandal exposed how market maker "loan" arrangements can be weaponized against retail token buyers.

Summary

  • Movement Labs launched the MOVE token in December 2024 with backing from World Liberty Financial
  • Internal documents showed executives coordinated with market makers to dump tokens post-listing
  • 66 million MOVE tokens were sold the day after listing, crashing the price
  • Deal structure incentivized pumping to $5B FDV then dumping for "shared profit"
  • Coinbase delisted MOVE; Binance froze proceeds
  • Multiple executives were terminated; investigations ongoing

Background

Movement Labs

Movement Labs developed Movement Network, a Move-based Layer 2 blockchain built on Ethereum. The project raised $38 million in a Series A led by Polychain Capital in April 2024.

The MOVE token launched on December 9, 2024, with listings on major exchanges including Binance, Coinbase, and OKX.

World Liberty Financial Connection

World Liberty Financial (WLFI), a DeFi protocol associated with the Trump family, was an early backer of Movement Labs. This high-profile connection attracted significant retail attention to the MOVE token launch.

The Scheme

The Market Maker Agreement

Movement Labs entered into a market maker agreement that included provisions far outside normal liquidity arrangements:

NORMAL MM AGREEMENT MOVE MM AGREEMENT
Provide liquidity on order books ☑ Yes
Maintain spread targets ☑ Yes
Receive tokens for liquidity ☑ Yes
Coordinate dump timing with project ☒ Included
Share profits from retail losses ☒ Included

The Documented Plan

According to CoinDesk reporting, documents reviewed showed explicit incentives to:

"Manipulate the price to over $5 billion fully diluted value and then dump on retail for shared profit."

The scheme operated as follows:

sequenceDiagram
    participant Movement as Movement Labs
    participant MM as Market Maker
    participant Retail

    Note over Movement,MM: Pre-listing agreement

    Movement->>MM: Provides tokens for "liquidity"
    Note over MM: Day of listing

    MM->>Retail: Creates buying pressure
    Note over Retail: FOMO buying, price pumps

    Note over MM: Day after listing

    MM->>Retail: Dumps 66M tokens
    Note over Retail: Price crashes

    MM->>Movement: Shares profits
    Note over Movement,MM: Retail holds bags

Figure 1: The coordinated pump-and-dump scheme.

Execution

On December 10, 2024—one day after the MOVE token listed—the market maker sold 66 million MOVE tokens into retail buying pressure. The token price crashed as supply flooded the market.

The tokens were supposed to be used for liquidity provision. Instead, they were used for a coordinated dump.

Discovery and Fallout

The CoinDesk Investigation

In late April 2025, CoinDesk published an investigation based on internal documents and communications. The reporting revealed:

  • Secret contracts between Movement Labs executives and market makers
  • "Shadow advisors" who facilitated the arrangements
  • Hidden middlemen who obscured the flow of tokens

Exchange Response

EXCHANGE ACTION
Coinbase Delisted MOVE token
Binance Froze market maker proceeds
OKX Under review

Binance's freeze of the proceeds was notable—it demonstrated that even without regulatory requirement, exchanges could act against obvious manipulation when evidence was public.

Corporate Response

Movement Labs attempted to distance itself from the scandal:

  • Co-founder Rushi Manche was placed on leave
  • Multiple executives terminated
  • Company issued statements blaming "rogue actors"
  • Internal investigation announced

Market Impact

MOVE token price action reflected the scandal:

DATE EVENT PRICE IMPACT
Dec 9, 2024 Token launch Listed around $0.60
Dec 10, 2024 Market maker dump Crashed ~40%
Apr 30, 2025 CoinDesk story Further decline
May 2025 Coinbase delisting Trading volume collapsed

The Loan Model Problem

The MOVE scandal exemplifies the structural issues with market maker loan arrangements.

How Loan Deals Work

  1. Project provides tokens to market maker as a "loan"
  2. Market maker uses tokens to provide liquidity
  3. At agreement end, MM either returns tokens or pays strike price
  4. Strike price typically set at multiple of listing price

Misaligned Incentives

When strike prices are set at 2-3x the expected listing price:

  • Market maker has no downside if price crashes below listing
  • Market maker profits from any volatility they can create
  • Project executives can participate in profits through side agreements
  • Retail buyers are the counterparty to all of this
graph TD
    subgraph "Who Profits"
        MM["Market Maker<br/>Keeps dump profits"]
        EXEC["Executives<br/>Profit share agreements"]
    end

    subgraph "Who Loses"
        RETAIL["Retail Buyers<br/>Buy at inflated prices<br/>Sell at crashed prices"]
    end

    MM --> PROFIT["Profit Pool"]
    EXEC --> PROFIT
    RETAIL -->|"Losses become"| PROFIT

    style RETAIL fill:#FF6B6B
    style MM fill:#90EE90
    style EXEC fill:#90EE90
    style PROFIT fill:#FFD700

Figure 2: The zero-sum nature of coordinated dumps.

Regulatory Implications

As of early 2026, no criminal charges have been publicly announced. However:

  • SEC has reportedly opened an inquiry
  • State attorneys general have received complaints
  • Binance has cooperated with information requests
QUESTION STATUS
Is coordinated dumping securities fraud? Depends on token classification
Are market maker agreements subject to disclosure? Unclear in crypto
Can exchanges be liable for listing manipulation schemes? Untested
Do side agreements between projects and MMs require disclosure? No current requirement

The core legal question: if MOVE is a security, this is textbook market manipulation. If MOVE is not a security, the legal framework is unclear.

Lessons

For Token Buyers

  • ☒ High-profile backing (celebrity, political) signals nothing about integrity
  • ☒ Day-one pumps on new listings often precede dumps
  • ☒ Market maker arrangements are rarely disclosed
  • △ Wait for price discovery before buying new listings

For the Industry

  • ☒ Loan model agreements create structural conflicts
  • ☒ Self-regulation has failed to prevent obvious manipulation
  • ☑ Exchange enforcement (Coinbase delisting, Binance freezing) can have impact
  • △ Regulatory clarity on token classification would enable enforcement

For Projects

  • ☒ Market maker agreements will eventually become public
  • ☒ Executive involvement in trading schemes destroys credibility
  • ☒ Retail trust, once lost, doesn't return

Open Questions

Several questions remain unanswered:

  1. What role, if any, did World Liberty Financial play in the arrangement?
  2. How many other token launches have similar undisclosed agreements?
  3. Will any criminal charges result from the investigation?
  4. What happened to the frozen Binance proceeds?

References

Primary Reporting

Market Maker Context

Changelog

DATE AUTHOR NOTES
2026-01-09 Artificial. Generated by robots.
? ? Reviewed, edited, and curated by humans.