Phantom’s TVL dropped from over $364 million in early May to nearly $70 million on July 14. Meanwhile, it’s worth noting that Phantom’s TVL exceeded $7.5 billion at its peak in 2022. Co-founder Andre Cronje spoke about the Multichain incident and clarified the compensation.
The Phantom founder, shaken by the multichain blow, spoke!
Fantom co-founder Andre Cronje said Multichain’s debacle, which has seen a sharp drop in activity over the past weeks as a result of Multichain’s problems, is a “huge blow” for the smart contract platform. According to data from DefiLlama, Fantom’s total locked value (TVL) was over $364 million at the beginning of May. However, it dropped to about $70 million on July 14. Meanwhile, at its peak in 2022, Phantom’s TVL exceeded $7.5 billion. The price of the native token Phantom (FTM) also fell from $0.41 to $0.28 during the same period. Cronje commented in a forum thread:
Multichain has been a big hit. We got a lot of assurance from the Multichain team on server decentralization, access and geolocation distribution. Do not trust, verify! That’s what I’m telling myself.
Andre Cronje said, “At this point we are exploring all options. We are also working with relevant organizations to recover assets,” he said. In addition, Cronje noted that the Foundation is ready to use its own treasury to reimburse users if necessary.
What happened in Multichain?
cryptocoin.comAs you follow, the CEO of Multichain, the only person controlling its servers, was arrested in May. After that, on July 14, Multichain announced that it was shutting down its operations. Cronje’s comments followed this development.
With its leader arrested and technical difficulties escalating, Multichain was exploited on July 6. $125 million worth of cryptocurrencies were withdrawn from multiple wallets, affecting the Ethereum side of the Fantom, Moonriver, and Dogechain bridges. These withdrawals represented the majority of funds held on each bridge. Multichain stored all bits of its private keys in a “cloud account” under the sole control of its CEO. Someone later used this cloud server account to drain funds from the protocol.
The ripple effect of Multichain’s problems also affected loan protocol Geist Finance due to losses from abuse. The platform had to shut down permanently. Prior to the attack, over $29 million in crypto assets were locked in contracts running on the Fantom network. As such, the shutdown of Geist had a huge impact on Phantom’s TVL.
In response to the exploit, stablecoin issuers Circle and Tether froze over $65 million in assets linked to the attack. According to reports, Fantom has contacted both companies for local export. It is also reviewing ropllups for local bridge infrastructure.
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