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Movement Labs Secretly Promised Advisers Millions in Tokens, Leaked Documents Show
Movement Labs, the scandal-plagued crypto startup backed by Donald Trump’s World Liberty Financial, quietly promised large stakes of its token to early insiders—undisclosed deals that now raise fresh questions about who really holds power behind the scenes.
Even before its token launch, Movement Labs committed large portions of MOVE’s supply to a handful of early advisers — arrangements that were never disclosed to investors and only surfaced through internal documents reviewed by CoinDesk.
Two business memos obtained by CoinDesk — one promising a single adviser nearly $2 million a year — show how Movement, founded in 2023 by two 20-year-old Vanderbilt dropouts, leaned heavily on these advisers to gain a foothold in the crypto industry.
Movement Labs said the agreements, dated shortly after the project’s founding, were exploratory in nature and non-binding.
The existence of the agreements nonetheless casts new light on the chaotic inner workings of Movement, which came under fire after CoinDesk reported last month that insider market-making deals enabled token dumping by insiders.
The fallout has sparked waves of finger-pointing inside the company, centering on who steered Movement into a predatory agreement with a Chinese market maker under terms that analysts say incentivized predatory selling.
The tension has boiled over into a public rift between co-founders Rushi Manche, who was terminated by Movement Labs this month, and Cooper Scanlon, who stepped back from his CEO role but remains at the company.
“When we started Movement, I was the CTO — leading the engineering team. I left most business decisions, including the contracts, to Cooper,” Manche told CoinDesk in an interview for this report. “When priorities changed, our roles changed, but Cooper’s decisions in the early days heavily shaped the way the launch went.”
Shadow advisers
CoinDesk spoke to more than a dozen people familiar with Movement over the course of its investigation, including current and former employees who were granted anonymity so they could speak freely.
The agreements obtained by CoinDesk concern Sam Thapaliya and Vinit Parekh, both of whom played behind-the-scenes roles in shaping the project during its early stages. Together, they were allocated access to as much as 10% of the total MOVE token supply in signed memoranda of understanding that insiders say were intentionally kept off the books.
Thapaliya, the CEO of Zebec Protocol and an early advisor to Manche and Scanlon, was loaned 5% of MOVE’s supply for marketing and market-making purposes, according to one of the agreements obtained by CoinDesk. A second agreement allocated Thapaliya 2.5% of the token’s total supply, worth more than $50 million at recent prices.
Movement Labs told CoinDesk the signed agreements with Thapaliya were not binding, but Thapaliya claimed the agreements «were never voided.»
While framed as memoranda of understanding — normally considered non-binding — the agreements examined by CoinDesk also include provisions stating «both parties» must consent to their termination.
«I plan on pursuing legally to exercise my claim to retrieve 2.5% of tokens,» Thapaliya said.
Employees at Movement referred to Thapaliya as a “shadow co-founder” and said he was often consulted by Scanlon and Manche for major decisions.
His name also surfaced in internal communications regarding Movement’s deal with Web3Port. The Chinese market maker was later blamed for dumping $38 million in tokens after MOVE’s debut — an event that triggered a sell-off and Binance account bans.
The amount loaned to Web3Port, 5% of MOVE’s supply, was identical to the amount loaned to Thapaliya per the agreement.
When contacted by CoinDesk in advance of the initial investigation, Thapaliya denied having any financial interest in Movement Labs or the Movement Foundation. He also denied involvement in the Web3Port deal.
In later messages on Signal, Thapaliya told CoinDesk that his work with Movement was consistent with their agreement: “As per the contract signed in February 2023, I fulfilled the agreed terms by supporting Cooper [Scanlon] in exchange-related discussions, strategizing token allocation, assisting with market maker selection, and helping hire the team that audited his airdrop model.”
Memoranda of understanding
The use of informal agreements to quietly allocate tokens to insiders reflects a broader pattern within the crypto industry, where large sums can change hands without appearing in official fundraising disclosures.
In 2024, CoinDesk reported that Eclipse — another project linked to Thapaliya — secretly allocated 5% of its token supply to an employee at Polychain, a major crypto venture firm that later invested in the project. Polychain is also an investor in Movement Labs. Eclipse’s deal with the Polychain employee was scrapped following the publication of CoinDesk’s investigation.
What these cases illustrate is not necessarily fraud, but the ease with which crypto startups can make significant financial commitments behind closed doors — commitments that can later shape the trajectory of an entire token ecosystem, often without the community or even some employees ever knowing.
One person familiar with the matter said Movement’s agreements were tailored to explicitly avoid disclosures to investors or community members.
In another 2023 agreement obtained by CoinDesk, Movement Labs agrees to give an entity linked to Vinit Parekh, «Digital Incubation Group,» $50,000 annually for every $1 million raised by Movement Labs — a sum that would total approximately $2 million per year, based on Movement’s $38 million in funding. Another agreement granted a separate Parekh entity control of 2.5% of the MOVE token supply.
In exchange for his allocation, Parekh’s firm, Digital Incubation Group, was tasked with a broad mandate, including: “development of strategy framework, validated by relevant stakeholders; consultation through the pre-seed raise process (including advice and connection to investors), close seed raise; development of tokenomics and release plan; engage in structuring team pre-product launch.”
Like Thapaliya’s agreements, Parekh’s were structured as memoranda of understanding with a termination clause requiring consent from both «parties.» Parekh and Movement Labs both said the agreements were exploratory and that funds never changed hands between either party.
Two people close to Movement Labs said that Parekh, a Microsoft product manager-turned blockchain industry consultant, was nonetheless a frequent presence at Movement’s San Francisco office and played a role in the company’s hiring, marketing, and strategy decisions.
«I just care about the ecosystem,» Parekh told CoinDesk in an interview. «No money was given to me or to anyone I know,» in connection to the agreements, «[b]ut I did help them on the marketing strategy and understanding how to do go-to-market.»
A rift between founders
The fallout from Movement’s market-making scandal has exposed a widening rift between its co-founders, Manche and Scanlon.
After an excerpt from one of the Thapaliya agreements leaked on X, Manche pointed to Scanlon’s signature on the memo, highlighting his former partner’s role in approving the deal. He also reposted a message questioning whether Movement Labs was “throwing [Manche] under the bus” while Scanlon “played innocent.”
Manche was ousted from Movement Labs earlier this month, shortly after CoinDesk reported he had helped coordinate the project’s controversial market-making agreement with Web3Port and an intermediary known as Rentech — a third party that Movement later claimed misrepresented itself in the deal.
CoinDesk has since learned that Manche also played a role in facilitating a separate arrangement between Web3Port and Kaito, another crypto project that shares the same director and general counsel as Movement Foundation. A contract reviewed by CoinDesk shows that OpenKaito Foundation loaned 2.5% of its KAITO token supply to Web3Port for market-making purposes.
The agreement — which was also leaked on X by an anonymous account — was terminated shortly after it was signed, according to an X post from Kaito founder Yu Hu. Unlike the Movement deal, it did not include terms that experts said incentivized pump-and-dump behavior.
A person familiar with the matter said Manche introduced Kaito to Rentech, which then connected the project to Web3Port.
The controversy has already dented Movement’s reputation in an industry that once saw the startup as a rising star. Coinbase, the largest U.S. crypto exchange, announced it would suspend trading of the MOVE token on May 15. The token’s price fell by 50% in the following week.
On May 7, Movement Labs said it would spin out a new entity, Movement Industries, to serve as the network’s primary developer. Scanlon remains with the organization but has stepped down as CEO.
“I don’t think it’s here to stay,” Dave Portnoy said, referring to meme coins—the same corner of crypto he’s often poured fuel on through his social media antics.
Speaking on stage at Consensus 2025 with Tom Farley, CEO of crypto exchange Bullish, the Barstool Sports founder peeled back the layers of his short, chaotic stint in the meme coin world. With his usual brash candor, Portnoy described a journey of sudden windfalls, legal landmines, and the kind of public backlash that might make even the most hardened internet provocateur think twice.
“I love the rush, I’m a gambler at heart,” he admitted. “But then the smart part of me is like, is it worth the hate?” The conversation was part of a broader discussion about crypto’s culture of speculation and hype, where meme coins — tokens created more for jokes than utility — have captured the imagination of young, risk-hungry traders. Portnoy, who built Barstool into a media empire on viral content and sports gambling, found himself swept into the same digital fever.
It started with SafeMoon, one of the earliest viral tokens of the COVID-era crypto boom. Portnoy saw social media posts about traders making “9,000,000,000%” gains, bought in, made a video mocking its lack of real value — and got sued anyway.
“They basically said SafeMoon paid me to promote them. Total lie. Cost me $20k to get out of the lawsuit.” he said.
Undeterred, he pushed further. Inspired by the idea of launching a Barstool coin and skipping the hassle of going public, Portnoy began researching how meme coins are made. That led him to a developer who pitched a token called Libra, allegedly backed by the president of Argentina.
Portnoy bought $4.5 million worth.
“I was at SNL with Lady Gaga. I was just typing. I’m like, what the hell is going on here?” he said. The developer had told him Elon Musk would tweet about it. Instead, the president disavowed any involvement. “I lost all my money.”
Portnoy says he got lucky — the developer later reimbursed him in full, though he isn’t sure why. “I’m one of the lucky ones, but you know, I’m not going to not take that money back.”
Despite the losses, Portnoy kept dabbling. He launched coins called Greed and Greed 2, leaning into the satire. Another coin, JailStool, emerged from public outrage at his meme coin experiments. Someone else created the token, but Portnoy embraced the name and posted about it. At one point, he claims, a $1,000 investment ballooned to $7 million — within an hour.
“It took me 13 years to make that kind of money at Barstool,” he said.
But what goes up almost always crashes back down. Portnoy says he’s lost track of how many times he’s been accused of “rug pulls,” a term for when insiders dump a coin and leave latecomers with worthless tokens.
He described meme coins as a rigged game, dominated by a core group of early buyers with trading bots and algorithms who know when to exit. “It’s the same group of winners and it’s the same group of losers.”
That realization seems to have changed his appetite. While he teased the possible launch of Greed 3, he admitted the backlash is harder to stomach in real life. One man confronted him in a Las Vegas casino, claiming he lost $200,000. “It’s all fun and games behind the computer but that reinforces people are losing and making real money, and they’re not always taking responsibility for the risk, even though I think they should.”
Despite the money and the memes, he says the meme coin scene is ultimately unsustainable.
“I get why people like it,” he said. “It’s a form of gambling, it’s a Ponzi scheme, I don’t mean that in a negative way.”
Portnoy doesn’t claim to have the answers. But if he’s a weathervane for where meme coin mania might be heading, the forecast looks grim. “I can’t imagine it’s here to stay. I think it’s here to stay for the next four years. What happens after that? I don’t know.”
The crypto rally took a long-overdue pause on Thursday as traders took some profits following weeks of relentless advance that lifted bitcoin BTC close to record prices.
The consolidation occurred amid a slew of U.S. economic data releases. April retail sales missed expectations, producer prices rose less than forecast, jobless claims stayed on track, while the NY Empire State Manufacturing Index and Philadelphia Fed Manufacturing Survey showed softening business activity—signals that did little to rattle traditional markets. The S&P 500 added 0.4%, while the Nasdaq finished flat.
Bitcoin pulled back to $101,000 early in the U.S. session before rebounding above $103,000 later, modestly down over the past 24 hours.
Altcoins fared worse with the broad-market CoinDesk 20 Index declining 3% during the same period. Native tokens of Aptos APT, Avalanche AVAX and Uniswap UNI tumbled 6%-7%.
Crypto investors shouldn’t sweat today’s pullback, analysts told CoinDesk.
«The current pullback appears to be a correction within a broader medium-term uptrend,» said Ruslan Lienkha, chief of markets at YouHodler.
The upward momentum in equity markets moderated after the China-U.S. tariff delay, and short-term traders began locking in profits, he said. «This shift in sentiment has spilled over into riskier assets, including BTC.»
«Anything below 5% [price move] can often be considered just market noise,» said Kirill Kretov, trading automation expert at CoinPanel. «Some of this movement likely comes from profit-taking, as traders secure gains after the recent rally. With liquidity so thin, even modest sell-offs can quickly translate into noticeable corrections.»
Backing away from short-term movements, the broader price action seems healthy with no clear signs of an imminent top.
Vetle Lunde, senior analyst at K33 Research, said BTC just exited one of its longest periods of below-neutral funding rates, a signal of defensive positioning
«This resembles the risk-averse patterns from October 2023 and 2024 and is far from resembling price action near past local market peaks,» wrote Lunde, who was optimistic that the lack of froth with BTC above $100,000 BTC paves the way for potential fresh record highs.
According to Steno Research, crypto tailwinds stem from a stealth expansion in private credit—especially in the U.S. and Europe. In past bull runs, crypto thrived on base money expansion: massive injections of reserves by central banks that fueled asset inflation across the board. This time, however, the balance sheets of the Fed and European Central Bank have continued shrinking through quantitative tightening.
“Many have pointed to China’s liquidity injections as the primary driver of the rally,” Samuel Shiffman wrote in a Thursday report. “But that misses the mark. The real support is coming from Western bank credit growth—a quieter, less visible engine behind this move.”
He said that forward-looking indicators project global financial conditions improving into the summer months, driven primarily by the U.S. dollar weakening. This has historically lead to higher BTC prices.
«We’ve likely got room through June and into early July before the picture begins to change,» Shiffman said. «But once we approach the back half of July, the setup gets trickier. Our leading indicators suggest that the peak in financial easing might not last past August.»
Banks need to be part of crypto for stablecoins to succeed—that was the message from Jose Fernandez da Ponte, PayPal’s senior vice president of digital currencies, during a panel discussion at Consensus 2025 in Toronto.
«It might sound counterintuitive, but you do want the banks in this space,» Fernandez da Ponte said, adding that their infrastructure—from custody to providing fiat rails—will be essential if stablecoins are to scale beyond crypto-native circles. «You want that connectivity and that fabric to work.»
His remarks came amid efforts to bring regulatory clarity for digital assets in the U.S., with lawmakers inching closer to pass stablecoin legislation that could redefine the market and allow banks to enter the space.
Read more: U.S. Senate’s Stablecoin Push Still Alive as Bill May Return to Floor: Sources
«This is going to be a big unlock,» said Anthony Soohoo, chairman and CEO of MoneyGram, a cross-border money transfer service. «There’s always hesitation: Can I trust this? [The stablecoin legislation] is going to answer a lot of those questions.»
Both executives said they expect a wave of new issuers to enter the market once regulation is in place, followed by a period of consolidation. “It’s not going to be 300 stablecoins, and it’s not going to be just two,” Fernandez da Ponte said.
Currently, Tether’s USDT USDT and Circle’s USDC USDC dominate the market, representing nearly 90% of the $230 billion asset class. PayPal’s PYUSD PYUSD, launched in 2023, lags far behind with $900 million supply. Fernandez da Ponte pushed back on market cap as the primary metric for success. «We look at velocity, active wallets, number of transactions,” he said. “Those are what drive real usage.»
In countries with high inflation and volatile currencies, consumers are seeking out dollar-backed stablecoins as stores of value and tools for cross-border payments. Soohoo said MoneyGram, which operates in over 200 countries with nearly half a million cash-access locations, is helping facilitate that access.
«We see ourselves between physical finance and digital finance,» Soohoo said. «A lot of consumers in local economies want to hold value in dollars but still need to access it as cash to spend in places that don’t take digital currency.»
Stablecoin adoption in developed countries, meanwhile, has been slower. With clear regulation in place, stablecoins can streamline corporate treasury operations and cross-border disbursement, Fernandez da Ponte noted.
«We used to have this mad rush on Friday to make sure money was in the right places before the weekend,» he said. «Now we’re sending money to the Philippines and Africa in ten minutes with stablecoins.»
Both executives noted that real-world use cases, not hype, will determine if stablecoins could reach the trillion-dollar scale in the next years that’s been projected.
«Consumers don’t care about stablecoins. They care about solving problems.» Fernandez da Ponte said. «We’re five years into a ten-year journey, and regulation will define the next half.»
Dave Portnoy Says Meme Coins Are ‘Gambling’ and Not Built to Last
Bitcoin Holds Above $100K, Altcoins Slide as Analyst Sees Crypto Rally Into Summer
PayPal Crypto Head Says Banks Are Needed to Unlock Full Stablecoin Potential
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