How MOVE’s Contracts Put a Pump and Dump Into a Legal Agreement - Ep. 828
🎯 Summary
Podcast Episode Summary: How MOVE’s Contracts Put a Pump and Dump Into a Legal Agreement - Ep. 828
This episode of Unchained, hosted by Laura Shin, features Sam Kessler, Deputy Managing Editor for Tech and Protocols at CoinDesk, discussing his investigative report on the controversial Movement (MOVE) token launch and the underlying market-making agreements that appear to incentivize market manipulation.
1. Focus Area
The discussion centers on Crypto/Web3, specifically focusing on token distribution mechanisms, market-making agreements, potential market manipulation, corporate governance structures within decentralized projects (Labs vs. Foundation), and the immediate regulatory fallout following investigative journalism.
2. Key Technical Insights
- Market-Making Abuse: The core issue revolves around a contract that allegedly turned standard market-making into a mechanism for insiders to profit from price pumps, undermining standard market integrity.
- Token Vesting Circumvention: The agreement appears to bypass typical token lock-up/vesting schedules designed to prevent early insider dumping, allowing for immediate, large-scale liquidation.
- Complex Entity Structure: The scandal highlights the deliberate complexity in crypto project structures (Movement Labs vs. Movement Foundation) often used to manage regulatory risk, which in this case, may have obscured accountability.
3. Market/Investment Angle
- Real-World Impact of Reporting: Kessler’s reporting immediately led to significant market consequences, including Coinbase suspending the MOVE token and Binance banning the involved market maker.
- Investor Scrutiny: The involvement of high-profile, crypto-native VCs (Polychain Capital, Coin Fund, Placeholder, etc.) raises questions about due diligence when complex, potentially manipulative agreements are signed.
- Incentivized Manipulation: A specific contract clause incentivized pumping the token price to a $5 billion FDV, after which the market maker could liquidate tokens for a 50/50 profit split with the insider entity, a clear red flag for investors.
4. Notable Companies/People
- Movement Foundation/Movement Labs: The entities behind the MOVE token and development, now under internal and external investigation.
- Web3Port: The Chinese market-making firm Movement thought they were contracting with.
- Rentech: The entity that actually signed the market-making contract, allegedly representing itself as a Web3Port subsidiary.
- Galen Lachoon: Stated he is the person behind Rentech (via his company Autonomy) and claims the Foundation’s general counsel knew about Rentech’s structure.
- YK Pak (Wassie Lawyer): General Counsel for the Movement Foundation, who initially deemed the draft contract “possibly the worst agreement I have ever seen” but ultimately signed a version of the deal.
- Rushi Monshay & Cooper Scanlan: Co-founders of Movement Labs, with Rushi implicated in circulating the initial deal internally.
- Sam Tapoli: Described as a “shadow co-founder” who linked Movement to investors and was CC’d on relevant communications.
5. Regulatory/Policy Discussion
The entire situation underscores the legal risks associated with opaque financial agreements in crypto. The structure involving separate Labs and Foundation entities is noted as a common tactic to avoid securities regulations. The explicit incentive structure within the contract raises serious concerns regarding market manipulation laws, even if the project operates outside traditional finance.
6. Future Implications
The conversation suggests a growing trend where investigative journalism is having immediate, tangible effects on token viability (delistings, bans). It also highlights the need for greater transparency and clearer separation of duties within crypto organizations, especially when dealing with large token allocations and market support agreements, to prevent these types of contractual loopholes from being exploited.
7. Target Audience
This episode is most valuable for Crypto Professionals, Legal Counsel in Web3, Investment Analysts, and Journalists covering the blockchain space, as it dissects a complex, high-stakes corporate governance and financial scandal.
🏢 Companies Mentioned
💬 Key Insights
"BlackRock's move to tokenize shares of its $150 billion treasury fund."
"Ethereum researcher Dankrad Feist proposed EIP 9698, a plan to raise the gas limit ceiling 100-fold over four years. If adopted, it could boost network throughput to over 2,000 transactions per second without requiring a hard fork."
"those contracts to the experts that I spoke to showed at least an incentive for market manipulation, which is a big no-no, just legally, even in crypto."
"It's a big deal. I mean, it's very rare that in response to anything an asset issuer will suspend that asset."
"All we know is that this was a vehicle that deliberately or not set up a structure by which an entity who had Web3Port was able to sell tokens for a 50-50 profit split at a favorable valuation at a $5 billion valuation."
"cliffs are there for a reason. And investors don't know these games are being played. It's the same with the fake floats, which make the token seem much bigger."