Multichain, which was the victim of a $125 million hack last week, was officially shuttered due to lack of funds. The Multichain team reports that the funds and access to the servers are currently in the hands of CEO Zhaojun, who is under custody. The altcoin project allegedly orchestrated an intentional rug pull.
Multichain halted operations
Cross-chain router protocol Multichain announced that it had to “stop operations” due to a lack of operational funds. Protocol lost $125 million in a hack attack last week. The latest announcement is followed by a “rug pull” report by Blockchain analytics firm Chainalysis.
On July 14, Multichain’s official Twitter account announced that it would finally cease operations. The team said that “lack of alternative sources of information and relevant operational funds” has forced them to shut down their business operations.
Funds and access to servers are in the hands of the altcoin founder
In the announcement, the Multichain team stressed that it has not made contact with the founder “Zhaojun” since he was detained by the Chinese police. According to the team, they contacted the CEO’s family. From there, they learned that Zhaojun’s computers, phones and wallets were confiscated by the authorities. According to the official statement:
Since the beginning of the project, all operational funds and investments from investors have been under Zhaojun’s control. This also means that all of the team’s money and access to the servers are in Zhaojun and the police.
Meanwhile, it was revealed that Zhaojun’s sister transferred some funds to addresses under her control. However, this was followed by the family of the CEO of Multichain informing the team that Zhaojun’s sister was also detained by the police and is now disconnected. As a result, the team announced that it has now ceased operations. All the funds they need right now are under the custody of the founder.
Backstage
The Multichain debacle started in May when Multichain routes were suspended due to the upgrade. This was followed by funds transfers taking longer than expected. Following this, crypto exchange Binance stopped support for deposits and withdrawals for some Multichain bridged tokens due to uncertainties surrounding the protocol.
To make things worse for the platform, massive exits from the Multichain MPC bridge platform have fueled fears of exploiting a vulnerability. On July 6, observers concluded that the protocol had been hacked due to the withdrawal of $100 million worth of assets from the Phantom bridge on the Ethereum side. cryptocoin.com As we reported, stablecoin companies Tether and Circle later froze some of the stolen funds.
Multichain may have ‘rug pull’
“On July 6, 2023, Multichain experienced unusually large, unauthorized withdrawals that appeared to be an insider hack or gimmick,” Chainalysis wrote in a July 10 blog post. The abuse has caused more than $125 million in losses so far.
However, Chainalysis believes the exploit may have resulted from compromised administrator keys. Which, some suggest, means it could be “insider work”. With the latest announcement on July 14, Multichain officially terminated its operations, citing its CEO.
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