Weekly Recap: Movement Labs Scandal, OP_RETURN Wars, and the Decline of Crypto Assets

Movement Labs is investigating the details of what has been labeled the «worst deal in history,» as an OP_RETURN war erupted within the Bitcoin community, analysts pointed to the «extinction» of cryptocurrency assets, and other notable events unfolded over the past week.

Bitcoin started the week on a shaky note, hovering around $94,000 and briefly dipping below $93,000 during the day. After a brief period of sideways movement on the last day of April, the price began a rapid ascent. This recovery coincided with a surge in activity from short-term investors.

On May 1, the price broke the $96,000 mark for the first time since February, subsequently surpassing $97,000. The total market capitalization of cryptocurrencies reached $3 trillion, a level not seen since March.

In addition to the increase in on-chain activity, there was a significant rise in open interest in Bitcoin futures throughout the week.

The cryptocurrency fear and greed index indicated a cautious optimism among market participants all week long.

Ethereum opened the week near the $1,800 mark. On April 30, its price fell to $1,731, but by the next day, it had confidently rebounded. As of the time of writing, the asset was trading around $1,826, marking a weekly increase of 1.7%.

Only Bitcoin and Ethereum among the top ten cryptocurrencies displayed positive performance over the past week, with the overall market capitalization standing at $3.07 trillion.

The Movement Labs team is probing the details of a deal with a market maker that resulted in the dumping of 66 million MOVE tokens and a subsequent price drop shortly after the asset was listed.

Internal communications suggest that the Movement Foundation transferred 66 million MOVE tokens (5% of the total supply) to Rentech, a broker with no public reputation. The contract permitted Rentech to sell tokens once the project’s market capitalization reached $5 billion, potentially creating incentives for price manipulation before a sell-off, according to experts from CoinDesk.

On December 9, just a day after MOVE was listed on exchanges, wallets associated with Rentech and the market maker Web3Port withdrew $38 million, triggering a 47% price drop. Binance subsequently blocked the market maker’s account for «violations,» while Movement announced a token buyback to stabilize the market.

Movement Foundation’s legal advisor, J.K. Peck, initially referred to the contract with Rentech as the «worst agreement in history,» but subsequently signed a revised version under pressure. He raised concerns that the deal transferred control over MOVE’s liquidity to an «opaque entity.»

The investigation revealed that Rentech acted as an agent for both Movement Foundation and Web3Port, which might have allowed it to dictate terms. Rentech’s founder, Galen Lo-Kun, claims the deal structure was approved by Peck, a claim that Peck denies.

Sources from CoinDesk suggest potential involvement from Movement Labs co-founder Rushi Manch and project advisor Sam Tapalia in the scheme. It is reported that Rentech’s founder, Galen Lo-Kun, is a business partner of Tapalia.

Internal chats indicate that Manch promoted the deal with Rentech despite objections from legal advisors. Tapalia, who was present at Movement’s office on the token launch day, participated in creating airdrop lists but denies having influence over company decisions.

Industry veteran Zak Maniyan stated that Movement’s contracts created ideal conditions for a Pump & Dump scheme, as market makers could artificially inflate prices and then «dump» tokens onto retail investors.

Movement Labs has hired auditing firm Groom Lake to analyze the transactions.

Previously, experts identified insider manipulations as the cause of the recent crash of the RWA project token Mantra, which plummeted by 90%, resulting in a capitalization loss of $5.5 billion.

On May 2, amid the ongoing investigation, co-founder Rushi Manch was relieved of his duties.

Developer Peter Todd created a proposal to amend Bitcoin Core’s code to remove restrictions on storing arbitrary data in the blockchain. This initiative has divided the community.

The proposal seeks to eliminate the 83-byte limit in the technical parameters of the OP_RETURN script. If the restrictions are lifted, node operators could publish larger data volumes, such as media files, within transactions.

In the proposal, Todd formalized an initiative put forth by Antoine Poirson from Chaincode Labs. Both developers see holding onto non-functional parameters as «silly,» as users can easily bypass the limit by broadcasting transactions through private mempools like MARA Slipstream or alternatives to Bitcoin Core like Libre Relay.

Some commentators supported the removal of what they perceive as redundant code.

However, others, while acknowledging the limit’s inefficiency for OP_RETURN, expressed opposition to its removal, arguing that lifting restrictions would facilitate spam proliferation in the network and threaten Bitcoin’s standing as a financial asset.

Bitcoin Core developer Luke Dash Jr., a well-known critic of Ordinals and BRC-20 tokens, labeled Todd’s proposal as «utter madness.» He noted that the «attack» from «arbitrary data spammers» has persisted for over two years.

The platform founded by Dash and Jack Dorsey encourages miners to ignore non-financial transactions in favor of fees.

Jameson Lopp, co-founder and CTO of Casa, observed the resurgence of «OP_RETURN wars» and reposted a statement claiming the failure of OCEAN’s censorship policy.

A Bitcoin user under the pseudonym Bryan labeled Todd’s proposal as «technically sound and correct.» However, he sided with the critics, emphasizing that opponents like Dash are right from a strategic perspective. He argues that the increase in data volume poses long-term threats.

Out of nearly 7 million crypto assets tracked by DEX tracker GeckoTerminal since 2021, 3.7 million—over half—ceased trading, which CoinGecko analysts categorize as failures.

In Q1 2025, 1.8 million tokens collapsed—49.7% of all recorded CoinGecko project failures.

The total number of crypto projects has also sharply increased: while 428,383 coins were added to GeckoTerminal in 2021, by 2025 that number approached 7 million.

Analysts attribute this explosive growth to the launch of Pump.fun, a «meme token factory,» which radically simplified the process of creating coins. As a result, new crypto assets could emerge in mere minutes and with minimal effort.

The number of projects that collapsed in Q1 2025 reached 1.8 million (49.7% of the total), surpassing any other year.

In 2024, 1.4 million projects were shut down—37.7% of the total over the past five years.

An independent team of developers announced the launch of a «neutral rollup» for Ethereum, R1, which will not have its own token or centralized control.

The core idea behind R1 is a return to Ethereum’s fundamental principles of decentralization and neutrality.

According to the creators, rather than relying on venture capital or asset sales, the project will depend solely on donations. They believe this approach can achieve true neutrality and align with the interests of the ecosystem.

The new rollup is built on the Surge technology stack from Nethermind and utilizes open-source code from Taiko. The Taiko DAO will receive 1% of the network’s base fees until 2030 or until all fees are burned.

The Ethereum R1 rollup is intended to launch as a fully decentralized second-layer system managed by smart contracts.

In a new article, we spoke with Bitget CEO Gracie Chen about the current state of the cryptocurrency market, the major trends of the year, and predictions for the industry’s future. We explored how blockchain and Web3 are transforming the labor market, what new professions are emerging in a decentralized reality, and the challenges professionals face along the way.

We discussed the nuances of the current halving cycle and analyzed why things deviated from the usual script.

In the traditional digest, we compiled the key cybersecurity events of the week.

Lastly, we explained what the Nakamoto coefficient is and how to calculate it.