Crypto started with a promise: fairness, openness, and a clean break from the old guard. No banks. No gatekeepers. No suits calling the shots.
In those early days, a launch didn’t mean a marketing campaign or a CEX listing. It meant spinning up a node, opening the repo, and letting the internet decide what it was worth.
- No pre-sale.
- No pitch deck.
- No venture capital calling the shots.
Just a white paper and a node. That was Bitcoin.
No pre-sale. No team allocation. Just code in the wild. SLater, Yearn’s YFI followed the same path: no investor carve-outs, no founder rewards. Messy, but honest. It was kind of messy. But that’s what made it feel real.
And even as the space got more polished, with bigger checks, sleeker interfaces, and venture capital at every corner, people held onto that original idea. That tokens could still represent something fair. That crypto could be different.
Because of the alternative?
Well, it looks a lot like what we were trying to escape – a closed system but with fewer rules.
So people kept believing. But belief isn’t bulletproof. It bends. It cracks.
And when it finally breaks, you’re left staring at the question no one likes to ask.
Who was always in the room, and who never stood a chance?
How Token Launches Actually Work, and Who Gets In First
Behind every slick launch thread, every flashy website, and every “community-first” pitch, there’s usually a different story. A quieter one. One that never makes it into the docs.
Because let’s be real, most token launches today aren’t fair.
They’re layered.
And each layer?
It gets more access, more information, and more upside.
At the top, you’ll find the usual suspects: VCs, “strategic partners”, and early insiders. They sign off-chain SAFT deals before the public even knows the project exists, often at 70–90% discounts. These aren’t just friendly seed checks. They come bundled with perks: soft vesting, early liquidity, and even clauses to protect them from future dilution.
Then there’s the middle layer.
Advisors. Influencers. Friendly wallets. They get allocations too, often disguised as “growth incentives” or “ecosystem support”. It all sounds community-orientated until you realize none of it is disclosed in full.
By the time you (retail) show up?
- The price is already set, based on private round multiples.
- The supply is already sliced, mostly into insider wallets.
- The liquidity is already gamed, engineered to look strong but hollow underneath.
Then comes the listing. Which, let’s be honest, isn’t the starting gun.
It’s the closing scene. The part where market makers enter to clean up, or cash out.
And here’s where it really gets sketchy.
Market makers aren’t just there to stabilise things. Sometimes, they’re loaned massive chunks of tokens, 5%, 10%, or even 15% of the total supply. In Movement Labs’ case?
And these MMs? They’re not always putting up their own capital. They’re just handed tokens, sometimes with zero obligation to actually support price or provide real liquidity. Movement’s early draft even gave the MM full discretion and no uptime commitment.
You can guess what happened next.
MOVE tokens, 66 million of them, were allegedly dumped shortly after listing. Price crashed. Community blindsided.
But was it a rug? Or just the script playing out?
Because when you look closely, this wasn’t an accident. It was choreography.
Meet the UPAs: Unaccountable Power Actors
In a system built on transparency. Doxxed teams. Open-source code. Governance forums. It’s remarkable how much still happens in the dark.
The real decisions? Often happens somewhere else entirely.
Private chats. Investor group calls. Quiet dinners. The kind of places where no one’s taking notes and no one’s accountable.
That’s where the UPAS live.
These aren’t anonymous scammers or rogue wallets. They’re real people with real influence but no real oversight.
Sometimes it’s a VC nudging for a listing to hit their return deadline.
Sometimes it’s a “strategic advisor” with no formal role but plenty of backstage access.
Sometimes it’s a founder wearing too many hats, cutting deals from one entity and rubber-stamping them from another.
In the Movement Labs story, this dynamic was laid bare:
- Rentech, the market maker, allegedly signed both sides of the agreement. Once as the MM and again as a related party to Web3Port, the accelerator tied to Movement {^1}.
- Sam Thapaliya was described as an “informal consultant” with influence inside the Foundation, despite having no official position.
- And when legal counsel flagged the MM agreement as “possibly the worst” they’d reviewed, it still went through.
Market Makers: When Liquidity Becomes a Weapon
On paper, market makers are the grown-ups in the room.
They’re supposed to keep things stable, reduce slippage, smooth out volatility, and help a new token find its footing.
But in crypto, where contracts are vague and incentives misaligned. MMs can quietly switch from stabilizers to extractors.
The most predatory structure?
The token loan model. Let’s walk through it.
A project wants a big listing. The exchange demands liquidity. The team reaches out to a market maker (MM). But instead of paying them in dollars or stables, they offer something cheaper: tokens. Millions of them.
Here’s the typical setup:
- Tokens are loaned to the MM, often for free.
- The MM might get call options too, giving them the right to buy more later at a discount.
- The MM sells into launch hype, pocketing profits without using much of their own capital.
- If the price tanks? They can buy back cheap or settle in cash.
It’s a free trade with upside and no real downside. A risk-free short.
Who pays for this?
- The project eats the volatility.
- The community absorbs the sell pressure.
- And the MM walks away clean.
In the case of Movement Labs, the early draft of the Rentech agreement reportedly followed this exact pattern. One clause even tried to hold the project liable if a CEX listing didn’t happen on schedule, essentially making the team backstop the MM’s risk.
The clause was later removed. But the intent? It was clear.
This wasn’t about building a market. It was about staging a profitable exit.
Liquidity, in this setup, isn’t infrastructure.
How Internal Failures Enable External Extraction
Every project claims to have governance, a multi-sig, a foundation, maybe a DAO. But when millions are lost or tokens dumped, the real question isn’t:
“Was governance in place?”
It’s “Did it do anything when it mattered?”
In Movement’s case, governance existed on paper.
- Bypassed controls: The Rentech deal was reportedly flagged as “possibly the worst agreement they had ever seen” by the Foundation’s own legal counsel. It moved forward anyway.
- Verbal over written: Despite glaring flaws in the draft agreement, the Labs team allegedly insisted it didn’t reflect the “real deal”, which included verbal promises of liquidity.
- Blurred roles: Movement Labs (the company) and the Foundation (which controlled the token) were supposed to be separate. But co-founder Rushi Manche, with no formal Foundation role, reportedly pushed the deal through.
- Shadow actors: An “informal consultant” named Sam Thapaliya reportedly held sway over Foundation decisions without any title or accountability.
The governance system didn’t fail because it was broken. It failed because it was bypassed.
It wasn’t a decentralization failure. It was a failure to build guardrails.
Sure, legal counsel eventually stepped in. They added real safeguards:
- Proof-of-funds requirements.
- Collateralization on the token loan.
- Anti-manipulation clauses.
- Termination rights for non-performance {^2}.
But by then, the deeper issue had already surfaced. Governance had become performative.
It looked right. It checked boxes.
But when it came time to say no, it didn’t.
And this isn’t just a Movement problem.
Across the space:
- Foundations are often controlled by the same people they’re meant to balance.
- DAOs activate after key decisions are already made.
- Advisory boards show up in decks and vanish during crises.
The real risks? They don’t show up in governance dashboards.
They live in the space between how things are supposed to work and how they actually do.
And when that gap widens? It’s not the insiders who pay.
It’s the public. The holders. The ones who believed.
How to See the Game Before It Plays You
Look, it’s not enough to point fingers. If we want things to change, people need tools, not just caution signs.
So whether you’re a user trying to stay safe or a founder trying to do it right, here’s how to read the room before the music stops. Because this system won’t warn you.
It rewards silence.
For Users: Red Flags Are Warnings in Disguise
- The Private Sale Black Box: No info on early investors? No dates, no prices, no lockups? That’s not a slip. It’s a signal. You’re not supposed to know.
- Token Loans to Market Makers: If an MM is loaned tokens with no spread guarantees, no uptime KPIs, or operates at “sole discretion”, it’s not a liquidity partner. It’s a risk. Especially watch for clauses that let MMs walk away while still pocketing upside or restrict the project’s own actions unless MM-approved {^2}.
- Multi-Sigs With No Policy: If the treasury is controlled by a 2-of-3 multi-sig with no transparency or voting process? That’s not decentralization. That’s a velvet rope club.
- Advisors You Can’t See: When anonymous names show up in Discords and pitch decks but not in governance or public bios, ask why they’re hiding. Because they’re probably not irrelevant, and that’s unaccountable influence waiting to be weaponized.
- Shilling First, Explaining Later: If the tweets are louder than the docs, and no one can explain what the token does, it’s probably not a protocol. It’s a pump.
For Founders: Accountability Is the Architecture
- Default to Disclosure: If you wouldn’t show your MM or advisor deal to your community, don’t sign it.
- Kill the token loan model: Pay market makers in fiat or stables. Require proof of funds. Tie payment to KPIs. Secure token loans with collateral, not hope.
- Vest Like You Mean It: Use cliffs. Stretch unlocks over 12–24 months. Publish schedules, and stick to them.
- Build Real Governance: External signers. Documented treasury policies. Empower legal counsel to reject legally unsound terms, not just rubber-stamp them.
- Say No to Extractive Capital: If a VC demands guaranteed liquidity, early exits, or listing control, they’re not a partner. That’s a liquidator-in-waiting.
Transparency isn’t a feature. It’s insulation. For you and the people backing your idea.
If you’re not designing for alignment, someone else is designing the extraction.
