Cross-chain protocol Multichain has announced that it is “forced to cease operations” due to a lack of operational funds. The announcement follows a report from blockchain analytics firm Chainalysis saying that withdrawals appear to be a “rug pull” by insiders.
On July 14, Multichain’s official Twitter account announced that it would be halting its operations. The team said that a “lack of alternative sources of information and corresponding operational funds” has forced it to shut down its business activities.
1. On May 21, 2023, Multichain CEO Zhaojun was taken away by the Chinese police from his home and has been out of contact with the global Multichain team ever since. The team contacted the MPC node operators and learned that their operational access keys to MPC node servers had…
— Multichain (Previously Anyswap) (@MultichainOrg) July 14, 2023
It also highlighted that the global Multichain team had not had contact with their CEO, known as Zhaojun, since he was detained by Chinese police. According to the team, they contacted the CEO’s family and learned that Zhaojun’s computers, phones, wallets and mnemonic phrases were seized by the authorities. They wrote:
“Since the inception of the project, all operational funds and investments from investors have been under Zhaojun’s control. This also means that all the team’s funds and access to the servers are with Zhaojun and the police.”
They added that 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 and is now out of contact. As a result, the team announced that it’s now halting operations.
The Multichain debacle started in May when Multichain routes were suspended due to an upgrade, with fund transfers taking longer than expected. Following this, crypto exchange Binance halted deposit and withdrawal support for some Multichain bridged tokens because of the uncertainties surrounding the protocol.
To make matters worse for the platform, large outflows from the Multichain MPC bridge platform sparked fears of an exploit. On July 6, on-chain observers concluded that the protocol was hacked as over $100 million worth of assets were withdrawn from its Fantom bridge on the Ethereum side.
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