SpiritSwap DEX Ceases Operations After Multichain Hack

SpiritSwap, a decentralized exchange (DEX) based on the smart contract platform Fantom, will cease operations on September 1 due to exposure to the problematic Chinese cross-chain protocol Multichain.

Developers disclosed on August 9 via Discord that the Multichain hack emptied SpiritSwap’s entire bank account, leaving them “without the means to finance essential aspects of our operation,” including operational costs, salaries, and marketing.

The team is seeking “a team to take over” the DEX by September 1st. If no change of ownership occurs by that date, the DEX will cease all operations.

SpiritSwap, founded in 2021, was one of the most prominent DEXs on Fantom before the bear market in cryptocurrencies.

Its total value locked (TVL) attained a record high of $374 million in January 2022 but has since fallen to $2.92 million at the time of publication due to the Multichain incident.

After months of rumors, Multichain’s developers confirmed that co-founder and CEO Zhanjing Zhang is Zhanjing Zhang.

In May, the Chinese police detained him on unknown charges. When he was arrested, he allegedly had complete access to Multichain’s private keys and servers.

Funds belonging to Multichain and its users have been exchanged for stablecoins as well as private coins and transmitted out of the protocol despite the lack of information regarding his detention.

Since then, some victims have asserted that the Chinese police are involved in an elaborate strategy to steal user funds.

Before the incident, Multichain was the cross-chain protocol of preference for Fantom.

At the time of publication, Fantom’s TVL had decreased from $364 million in early May to $72 million due to a combination of sequestered funds and capital flight.

Previously, Fantom’s lending protocol, Geist Finance, announced it would cease operations due to Multichain exposure.