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In an application made by the Fantom Foundation, it was requested that the Singapore High Court declare the bankruptcy of the Multichain Foundation. It was mentioned that this could create an opportunity to recover the $122 million stolen from Multichain’s Fantom bridge last year.
Statement from the Fantom Foundation on the Matter
In a blog post shared on March 4, Fantom made significant statements. The statement mentioned that following the Singapore High Court’s announcement on January 30 that Multichain lost $122 million in funds in July 2023 due to misuse, a default judgment was issued against the cross-chain protocol Multichain for “breach of contract and fraudulent misrepresentation”.
The statement was as follows:
Considering the final decision, we will use it to apply to the court to liquidate the Multichain Foundation and appoint a liquidator (equivalent to Chapter 7 bankruptcy in the USA) to help recover and distribute lost or frozen assets.
The court is expected to assess damages owed to Fantom and demand repayment from Multichain. Fantom Foundation indicated in a March 4 post that Multichain’s payment was not expected and accordingly, a liquidator would be sought.
If approved by the court, the liquidator would have the authority to take over the assets of the Multichain Foundation, reverse transactions, and control assets for the purpose of repaying creditors who are alleged to be owed.
Fantom Foundation also continued its statements, noting that while the court’s decision would only relate to its own losses, any legal victory could be used to create a claim against Multichain for all users.
Over the next few months, we will advance the issue until a liquidator is appointed.
Multichain did not immediately respond to a request for comment on the court decision.
The Magnitude of Multichain’s Exploitation
According to calculations by blockchain security firm Beosin and Fantom, Multichain’s total losses related to exploitation were estimated to be $210 million.
The protocol helped users transfer funds to multiple blockchains, including Fantom, Ethereum, and Polygon, and enabled a series of unauthorized withdrawals in July of last year.
At that time, blockchain analysis firm Chainalysis had suggested that the heist could have resulted from compromised administrator keys and might have been an inside job.
While all this was happening, a police report was also filed in China stating that Multichain and its founder Zhaojun He were “subject to an active investigation”. The founder was arrested for unknown reasons two months before the misuse in May 2023.
