The Multichain ecosystem, a decentralized platform that allows users to access multiple Blockchains with a single account, has been hit by a series of events that compromised the security and integrity of its service. The repercussions of these events reverberated throughout the altcoin community, resulting in panic selling and asset freezes. Especially big investors called whales started selling. Here are the details…
How did things start?
The saga began on May 21, 2023, when the CEO of Multichain, Zhaojun, was unexpectedly arrested by the Chinese authorities. The reason behind his detention remains unclear, but some speculate that it may be linked to China’s continued crackdown on cryptocurrency activities. As a result of his arrest, Zhaojun’s devices and assets were confiscated and the future of Multichain was plunged into uncertainty.
The first signs of trouble for Multichain users appeared on July 7, when they noticed unauthorized money transfers from Multichain Personal Coin (MPC) addresses. Shockingly, it is estimated that more than $100 million was transferred to unknown destinations without users’ consent. The enormity of fraudulent transfers has eroded trust in Multichain’s security measures, creating shock waves in the community.
Adding to the chaos, on July 13, Zhaojun’s sister claimed she had access to some of the remaining user funds and attempted to move them to addresses under her control. His efforts were short-lived, however, and he was promptly arrested by law enforcement. This further underlined the instability and potential abuse within Multichain’s ranks. In the face of these developments cryptocoin.com As we have also reported, the Multichain team announced that they had to cease their activities on July 14. They issued a recommendation urging the community to stop using the Multichain service, leaving users and investors in uncertainty and distress.
Especially altcoin Phantom was deeply affected.
News of the Multichain scandal resonated in the cryptocurrency market, causing panic among users and investors, especially among those who own FTM, the native token of Fantom, a Blockchain heavily dependent on Multichain. In a desperate attempt to minimize losses, a whale with a substantial FTM stash has reportedly sold all 16 million FTM tokens worth $4.8 million on Binance. The whale’s transactions were closely monitored with Etherscan, and it turned out that FTM tokens were exchanged for $3.8 million for $3.8 million USDC over the past week. With an average purchase price of $0.24 per FTM token, the whale managed to sell them for around $0.3 per token, making a profit of approximately $985,000.
Fantom, one of the altcoins most severely affected by the multichain scandal, quickly responded to the situation by taking decisive action. The project announced the freezing of $60 million worth of stablecoin assets in direct response to Zhaojun’s arrest and subsequent shutdown of the Multichain protocol. Several other projects that rely on Multichain for cross-chain transactions, including Phantom, have also found themselves grappling with the fallout.
The project was disappointed
In its official statement, Fantom expressed deep disappointment and assured its users and partners that it is working diligently to protect its interests against possible losses. The project immediately contacted issuers of popular stablecoins, including USDC, USDT, and TUSD, confirming the freezing of assets held in Multichain wallets. Fantom highlighted its ongoing efforts to bring clarity to the situation by contacting various sources and employees of Multichain. The statement concluded by outlining Fantom’s plans to support the affected community and developers at Opera Chain, promising more announcements in the coming weeks.
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