Sunday, July 14, 2024

Multichain CEO’s Arrest Triggers Operational Freeze

In a series of unfortunate events, the Multichain protocol, a cross-chain router protocol, has been left in a state of uncertainty following the arrest of its CEO, Zhaojun, on May 21, 2023. The arrest led to a series of operational disruptions, including the revocation of operational access keys to the Multichain’s MPC node servers, which were under Zhaojun’s personal control.

The Multichain team lost access to the servers and all operational funds, as they were under Zhaojun’s control. Despite the challenges, the team managed to maintain project operations to the best of their abilities through the remaining access on some non-MPC servers that hadn’t been revoked yet.

On May 30, the team informed the community about Zhaojun’s disappearance and the technical issues they were facing. However, the situation worsened when user assets locked on the MPC addresses were transferred to unknown addresses abnormally on July 7. Zhaojun’s sister, who had gained access to the cloud server platform, transferred the remaining user assets in the router pool to EOA addresses controlled by her on July 9.

However, on July 13, Zhaojun’s sister was taken into custody by the police, leaving the status of the preserved assets uncertain. As a result, the Multichain team has been forced to cease operations due to the lack of alternative sources of information and operational funds.

In response to the large, unauthorized withdrawals from Multichain on July 6, stablecoin issuers Circle and Tether froze over $65 million in assets tied to the suspected exploit of Multichain on July 8. 

Blockchain security and analytics firm Chainalysis described the July 6 withdrawals as a possible rug pull, suggesting it could have been an inside job. Despite these measures, the future of Multichain remains uncertain, with the team urging users not to use the Multichain service anymore.

On July 10, a report revealed that the Multichain Executor address had been draining anyToken addresses across many chains, leading to the loss of over $263,524.33 worth of tokens.

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