Movement Labs confirmed the suspension of its co-founder, Rushi Manche, following controversies over a market maker deal that he brokered.
Movement announced the suspension of Manche in a May 2 X post, explaining that the “decision was made in light of ongoing events.” The decision follows Coinbase’s recent decision to suspend the Movement Network (MOVE) trading, citing the token’s failure to meet its listing standards.
The suspension came after a recently announced third-party review requested by the Movement Network Foundation into an agreement orchestrated by Manche with Rentech — the latter helped broker an agreement with market maker Web3Port. Private intelligence firm Groom Lake is conducting the investigation.
This was followed by Web3Port reportedly selling the 66 million MOVE that it gained through the deal — about 5% of the total supply. This led to $38 million in downward price pressure in December 2024.
Groom Lake has not answered Cointelegraph’s inquiry by press time.
Related: Citadel Securities eyes market-making role for crypto exchanges: Report
Market makers are a controversial player in crypto
According to a recent analysis, the right market maker can be a launchpad for a cryptocurrency project, opening the door to major exchanges and providing valuable liquidity to ensure a token is tradeable. On the other hand, when the wrong incentives are set, market makers can kill a project as it is taking its first steps in the market.
A summer 2024 report suggests that up to 78% of new token listings since April 2024 have been poorly conducted, with some suggesting that market makers are involved.
Related: How to choose a market maker for your Web3 project
Lawsuits claim market maker manipulation
Creditors of bankrupt cryptocurrency lending platform Celsius Network have alleged that leading crypto market maker Wintermute was involved in the wash trading of the Celsius token. Wash trading is a form of market manipulation that creates the illusion that a particular asset is trading at a higher volume than it actually is.
This is far from the only such case. In late 2024, Fracture Labs, creator of the Web3 game Decimated, filed suit against market maker Jump Crypto for allegedly orchestrating a pump-and-dump scheme using its in-game currency, DIO.
Another notable example is a Wall Street Journal report claimed that DWF Labs, one of Binance’s largest trading clients, engaged in market manipulation, wash trading and inflated trading volumes amounting to $300 million through deals with crypto projects. DWF Labs and Binance later denied the accusation in May 2024.
Last month, a Massachusetts court fined crypto market maker CLS Global for fraudulent manipulation of trading volumes. In late February, the founder of a so-called crypto hedge fund and market maker called Gotbit was extradited from Portugal to the US, where he faces market manipulation charges and wire fraud conspiracy.
Magazine: What do crypto market makers actually do? Liquidity, or manipulation
