A crypto startup once hailed as a rising star now faces turmoil after leaked documents exposed secret token promises to insiders. Movement Labs, backed by Donald Trump’s World Liberty Financial, allegedly signed shadow agreements granting advisers up to 10% of its MOVE token supply deals never disclosed to investors. Furthermore, legal threats and internal feuds have erupted, deepening scrutiny of the scandal-plagued firm.
Shadow Advisers and Secret Deals
Internal memos reveal Movement Labs quietly pledged millions in tokens to early insiders. Two agreements show adviser Sam Thapaliya secured access to 7.5% of MOVE’s total supply worth over $50 million. Another deal promised consultant Vinit Parekh nearly $2 million annually. Both arrangements were labelled “non-binding” by Movement, yet clauses required mutual consent to terminate. Thapaliya, dubbed a “shadow co-founder,” claims the deals remain valid and plans legal action. “I fulfilled my obligations,” he said, referencing his role in market-maker selection and token strategy. Parekh, however, denied receiving funds but admitted advising on marketing. Despite Movement’s insistence the agreements were exploratory, leaked signatures and termination disputes suggest otherwise.
Founders at Odds as Scandal Deepens
The fallout has ignited a public feud between co-founders Rushi Manche and Cooper Scanlon. Manche, ousted in May, shifted blame to Scanlon for approving the controversial deals. “Cooper’s early decisions shaped the launch,” he said. Scanlon, who stepped down as CEO but remains with the company, has stayed silent amid the accusations. Tensions escalated after a leaked Thapaliya agreement surfaced online, prompting Manche to highlight Scanlon’s signature. Employees describe Thapaliya as a key strategist, consulted on major decisions including a doomed partnership with Chinese market maker Web3Port. That deal, tied to a $38 million token dump, sparked Binance’s intervention and a 50% price crash.
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Web3Port Deal
Movement’s partnership with Web3Port lies at the heart of its unravelling. Documents show the startup loaned 5% of MOVE’s supply to Web3Port, mirroring Thapaliya’s allocation. The market maker flooded exchanges with sell orders post-launch, triggering panic and account bans. Analysts called the terms “predatory,” accusing Web3Port of pump-and-dump tactics. Critics argue Movement ignored red flags. Legal counsel YK Pek reportedly warned the deal was “possibly the worst agreement” ever seen. Yet revised terms were approved, raising self-dealing concerns. Investigators later found Web3Port shared directors with Movement’s foundation, complicating accountability.
Fallout Spreads to Crypto Markets
Investor trust evaporated as MOVE’s price plunged. Coinbase halted trading on May 15, citing “routine review,” but the token had already sunk to $0.18, an 80% drop from its peak. Binance froze $38 million linked to Web3Port’s sell-off, while daily active addresses dwindled to 1,200. In response, Movement rebranded as Move Industries, pledging transparency. A $38 million buyback program launched to stabilise liquidity, and audits by firm Groom Lake aim to address governance gaps. However, skeptics question whether these steps can salvage its reputation.
Broader Implications
The scandal underscores systemic issues in crypto’s opaque token ecosystems. Informal deals, like Movement’s undisclosed MOUs, let startups funnel wealth to insiders without oversight. Similar cases, such as Eclipse’s scrapped Polychain deal, reveal a pattern of hidden allocations shaping markets. Regulators are now circling. Movement’s Trump ties amplify scrutiny, with authorities probing compliance with anti-money-laundering laws. Furthermore, developers urge standardised disclosures to prevent exploitation. “The community deserves transparency,” argued one industry advocate.
Written By Fazal Ul Vahab C H
