Crypto Platform Multichain Halts Operations Due to Lack of Funds

Cross-chain protocol Multichain stopped operations today, stating it is “forced to cease operations” because of the lack of operational funds. This comes shortly after hackers drained the platform of a massive $125 million, in what is believed to be one of the biggest crypto hacks or scams in history. On July 14, Multichain’s official Twitter account ... Read more

Jul 15, 2023 - 02:22
Crypto Platform Multichain Halts Operations Due to Lack of Funds

Cross-chain protocol Multichain stopped operations today, stating it is “forced to cease operations” because of the lack of operational funds. This comes shortly after hackers drained the platform of a massive $125 million, in what is believed to be one of the biggest crypto hacks or scams in history.

On July 14, Multichain’s official Twitter account revealed that it will be shutting down its operations. emphasizing that a “lack of alternative sources of information and corresponding operational funds” has forced them to shut down their business activities. The bridging protocol noted since May 21, the global Multichain team has not had contact with their CEO, known as “Zhaojun,” since they were detained by Chinese police.

Why did Multichain Halt Operations?

According to the tweet, Zhaojun’s sister notified the team of an asset preservation act, transferring some funds to addresses under her control. However, this was followed by the Multichain CEO’s family notifying the team that Zhaojun’s sister was also taken into custody by the police sometime around July 13 and is now out of contact.

Furthermore, the team highlighted they have contacted the CEO’s family and learned that Zhaojun’s computers, phones, wallets, and mnemonic phrases were seized by the authorities. The Multichain team claimed they have contacted the MPC node operators but learned that their operational access keys to MPC node servers had been revoked.

Why did Multichain Halt Operations?

They specified no member of the team has access to Zhaojun’s cloud server account, so nobody can log on to these MPC servers. In addition, since the beginning of the project, all operational funds and investments from investors have also been under Zhaojun’s control. As a result, all the team’s funds and access to the servers are with Zhaojun and the police. Multichain added,

“Due to the lack of alternative sources of information and corresponding operational funds, the team is forced to cease operations.”

Was Multichain Expoilt a Rug Pull?

The development comes after Multichain, which happens to be one of the largest bridging protocols in the crypto world suffered a $126 million hack with the attacker moving funds from its  Fantom (FTM) and Moonriver (MOVR) bridge.

Following the hack, blockchain data firm Chainalysis said the exploit “appears to be a hack or rug pull by insiders” that has led many “ecosystem participants perplexed.” The blockchain analysis firm also suggested that Multichain’s CEO, Zhaojun, went missing, which is also evidence of a scam project.

Users Belt Out Frustration

As the news broke out, It sparked a run with users blasting the bridging protocol. One user wrote, “At least you should revert all the transactions for the people that used the bridge after it was halted.” Others suggested the exploit as a possible exit scam.

Many are pointing towards a potential security breach as the cause behind this unexpected turn of events. Another user tweeted, “Oh no, the Multichain CEO disappeared like magic and now the team’s funds & access to servers are missing too!” hinting at an internal hack.

Whether an inside job or an external hack, the situation paints a grim picture regarding the multifold increase in rug pulls and exit scams. Recently, the blockchain security firm, Beosin published a report revealing that losses resulting from rug pull and exit scams in the crypto market surpassed those from decentralized finance (DeFi) hacks in May.

crypto-economy.com   

Tags: