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Movement Foundation (MOVE), a cryptocurrency project backed by Trump family’s World Liberty Financial, is under scrutiny following allegations of a pump-and-dump scheme. Reports surfaced detailing a deal that led to a $38 million token dump on the same day MOVE was listed on Binance. The controversy has raised significant questions about the project’s market-making practices and its ties to other entities.

Details of the $38 Million Token Dump

On April 30, internal documents revealed that the Movement Foundation had entered into a questionable agreement with Web3Port, a China-based market maker. According to the documents, the Foundation loaned nearly 50% of its circulating ecosystem supply to Web3Port, which subsequently routed the tokens through an obscure entity called Rentech. This move triggered a massive sell-off of 66 million MOVE tokens, valued at approximately $38 million at the time.

The token dump coincided with MOVE’s debut on Binance, causing a significant price drop that continued in the following days.

Incentives and Contractual Controversy

Co-founder Cooper Scanlon disclosed that the Movement Foundation was misled into believing Rentech was a subsidiary of Web3Port, a claim that turned out to be false. The contract between the entities included concerning clauses that incentivized a pump-and-dump scheme. Specifically, it allowed Rentech to liquidate its MOVE holdings if the token’s fully diluted value exceeded $5 billion. The profits from the liquidation were to be split 50-50 between Rentech and the Movement Foundation.

On December 9, the day MOVE launched on Binance, Web3Port executed the liquidation of 66 million tokens. This action caused the token’s value to plummet, with its market price continuing to decline thereafter. As of today, the 66 million MOVE tokens are worth just $15.7 million, a significant drop from their initial $38 million valuation.

Connections to World Liberty Financial

The controversy deepens with the involvement of Trump’s World Liberty Financial (WLFI). On January 28, WLFI purchased 3.42 million MOVE tokens for $1.5 million at a price of $0.439 per token. However, the value of these tokens has since dropped by more than half. Additionally, Web3Port invested $10 million in WLFI earlier this year, further linking the entities.

Lessons for Crypto Investors

This incident highlights the importance of conducting thorough due diligence before investing in cryptocurrencies. Here are some key takeaways for investors:

  • Research the Team: Investigate the people and organizations behind a project, including their track record and affiliations.
  • Review Tokenomics: Understand the distribution and allocation of tokens to assess potential risks of large sell-offs.
  • Examine Contracts: Be cautious of projects with complex or unclear contractual agreements that could lead to market manipulation.
  • Monitor Early Investors: Pay attention to entities holding significant portions of a token’s supply, as their actions can heavily impact market prices.

The Aftermath

As investigations continue, the Movement Foundation and Web3Port face mounting criticism over their roles in the token dump. The incident underscores the need for greater transparency and accountability in the cryptocurrency space, particularly for projects with ties to high-profile individuals or organizations.

Stay informed about the latest developments in the cryptocurrency world and explore more news on Global Crypto News.

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