Multichain Suspends Operations

Chain-crossing protocol Multichain has announced that it is “forced to cease operations” due to insufficient funds.

The announcement follows a report from blockchain analytics firm Chainalysis indicating that the withdrawals appear to be a “rug pull” by insiders.

On July 14, Multichain announced via its official Twitter account that it would cease operations. The team stated that a “lack of alternative information sources and corresponding operational funds” has forced it to cease its business operations.
It was also noted that the global Multichain team had not communicated with their CEO, Zhaojun, since he was detained by Chinese authorities.

“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.”

The team reportedly contacted the CEO’s family and learned that the authorities seized Zhaojun’s computers, phones, purses, and mnemonic phrases.

They wrote that Zhaojun’s sister informed the team of an asset preservation act and transferred funds to her control. However, the Multichain CEO’s family then informed the team that Zhaojun’s sister was also detained by the police and is currently unreachable.

As a consequence, the team has announced that it will cease operations immediately.
The Multichain debacle began in May when Multichain routes were suspended due to an upgrade, resulting in longer-than-expected fund transfers.

In response, the cryptocurrency exchange Binance suspended deposit and withdrawal support for some Multichain bridged tokens due to the protocol’s unpredictability.

Large outflows from the Multichain MPC bridge platform prompted fears of an exploit, compounding the platform’s woes.

Over $100 million worth of assets were withdrawn from the Fantom bridge on the Ethereum side on July 6, leading on-chain observers to conclude that the protocol had been compromised.