Multichain Throws In The Towel As Insider Theft Becomes More Likely

In a shocking turn of events, cross-chain router protocol, Multichain has unveiled its unfortunate fate – a bitter end brought about by the deprivation of operational funds. The news follows a report by the esteemed blockchain analytics organization, Chainalysis, suggesting that the withdrawals observed might signify a “rug pull”, a fraudulent act by company insiders.

A Grim Announcement Marks the End

The announcement, dated July 14, came through the official Twitter account of Multichain, revealing the final decision to stop their operations. The team cited the “absence of alternative informational resources and commensurate operational funds” as the driving force behind the cessation of their business activities.

Significantly, the announcement highlighted the lack of communication between the global Multichain team and their CEO, known as “Zhaojun.” The latter had been apprehended by Chinese authorities and since then, was reportedly out of touch with his team.

The Inaccessible Multichain CEO and Seized Assets

According to Multichain, attempts to connect with Zhaojun’s family disclosed that the police confiscated his computers, phones, wallets, and mnemonic phrases. The team painfully noted:

“From the project’s inception, all the operational funds and investments from our valued investors have been under the control of Zhaojun. That implicates that the entire team’s funds and server access are currently with Zhaojun and the authorities.”

Subsequently, the Multichain team was informed by Zhaojun’s sister about an asset preservation act, which led to the transfer of some funds to addresses under her control. However, this was soon followed by the unsettling news of her arrest, pushing her out of reach and communication. Consequently, the team publicly announced its decision to cease operations.

Unfolding the Multichain Crisis: An Upgrade Gone Wrong

The Multichain crisis first emerged in May when an upgrade led to the suspension of Multichain routes. As a result, fund transfers started exhibiting unexpected delays. The protocol’s escalating uncertainty prompted the renowned cryptocurrency exchange, Binance, to suspend deposit and withdrawal support for certain Multichain-bridged tokens.

The crisis deepened when large outflows from the Multichain MPC bridge platform triggered concerns of potential exploitation. On July 6, on-chain analysts determined that the protocol might have fallen victim to a hacking incident, as over $100 million worth of assets were abruptly withdrawn from its Fantom bridge on the Ethereum side.

The unraveling of Multichain serves as a stark reminder of the risks and challenges involved in the burgeoning blockchain industry. With operational funds dried up and the management team unreachable, the once-promising platform now stares at an uncertain future, leaving behind a trail of unresolved questions and distraught investors.

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