Multichain Ceases Operations Amidst Funds Shortage and Insider Allegations

In a surprising turn of events, cross-chain protocol Multichain has made an announcement, declaring a cessation of its operations due to a critical shortage of operational funds. The decision comes after blockchain analytics firm Chainalysis released a report suggesting that recent withdrawals may have been executed as a result of an insider-driven “rug pull.”

The distressing news was first unveiled through Multichain’s official Twitter account. The team reluctantly admitted that they had no choice but to halt their business activities due to a dire predicament. The lack of alternative funding sources and operational information forced their hand in making this regrettable decision.

However, the situation took an even more troubling turn when the team shed light on the unavailability of their CEO, known as Zhaojun. Chinese law enforcement had detained him, leaving the team grasping for answers. To their dismay, they discovered that Zhaojun’s computers, phones, wallets, and even his mnemonic phrases had been seized by the Chinese authorities. Consequently, all access to operational funds, investments, and control over the team’s servers was effectively severed.

Adding another layer of complexity to the narrative, Zhaojun’s sister came forward with information about an asset preservation act involving the transfer of certain funds to addresses under her control. Sadly, this twist in the tale took a tragic turn when the Multichain CEO’s family conveyed the alarming news that Zhaojun’s sister had also been detained by the police. As a result, the team found themselves unable to establish any contact with her. Faced with these grim circumstances, Multichain was left with no other choice but to make the heart-wrenching decision to cease all operations.

Multichain Faced Major Setbacks 

In a series of unfortunate events, the Multichain platform encountered significant challenges, casting doubts on its operations and raising concerns about its security. The ordeal began in May when the firm’s routes were temporarily suspended due to an upgrade, leading to unexpected delays in fund transfers. Consequently, leading cryptocurrency exchange Binance made the decision to cease deposit and withdrawal support for certain Multichain bridged tokens, citing uncertainties surrounding the protocol.

Adding to the platform’s woes, a massive outflow of funds from the MPC bridge platform heightened fears of a potential exploit. Observers closely monitoring the on-chain activities have now concluded that the protocol suffered a security breach. On July 6, a staggering amount exceeding $100 million worth of assets were illicitly withdrawn from its Fantom bridge on the Ethereum side.

This alarming incident sent shockwaves throughout the cryptocurrency community, as users and investors questioned the reliability and security of the Multichain platform. The unauthorized removal of such a substantial sum of assets from the Fantom bridge highlighted vulnerabilities within the Multichain protocol and raised concerns about the robustness of its security measures.

Multichain officials did not release an official statement regarding the security breach or the exact nature of the exploit. The lack of transparency from the platform further intensified anxieties among users and investors who remained uncertain about the safety of their assets held within the Multichain ecosystem.