Multichain halts operation following CEO's arrest; MULTI plunges 15%

Cross-chain protocol Multichain (MULTI) is ceasing operations because CEO Zhaojun and his sister were “taken away” by the Chinese police, according to a July 14 statement on its official Twitter handle.

Timeline of Multichain

In an unforeseen chain of events that unfolded between May and July 2023, the CEO of Multichain, Zhaojun, was apprehended by Chinese authorities, destabilizing the blockchain project. The situation escalated when user assets began to be transferred to unknown addresses.

Multichain (CRYPTO: MULTI) CEO Zhaojun has been detained by Chinese authorities, just days after the company issued an urgent warning that approximately $126 million worth of cryptocurrencies were drained from its platform. Zhaojun's sister was also detained.

Multichain, a bridging protocol, has confirmed that it has ceased operations as CEO Zhaojun's sister was arrested recently by the Chinese police while holding $220 million of the protocol's funds.

In a tale that seems ripped from the pages of a suspense thriller, the Multichain project shared a chilling narrative involving Chinese police, asset seizure and operational shutdowns. The CEO of Multichain, known as Zhaojun, was taken into custody by Chinese authorities on May 21, 2023, setting off a chain of events that have rattled the project to its core.

The CEO's sister was arrested in China days after she moved $220 million in user funds to wallets under her control. Multichain's team also confirmed the news that CEO Zhaojun was arrested by China police in May.

The Multichain hack could potentially be a “rug pull,” as an additional $103 million in funds were recently drained. Multichain, which is described as a cross-chain bridge protocol, reportedly saw another $103 million transferred to other blockchain addresses.

On July 6, 2023, the Multichain Protocol was hit by a massive hack, resulting in the loss of over $125 million worth of cryptocurrency. The attack targeted the protocol's Fantom bridge, resulting in the theft of valuable crypto assets like WBTC, USDC, DAI, wETH, and Link.

In what is being considered one of the largest cryptocurrency hacks to date, cross-chain bridge Multichain fell victim to a devastating breach resulting in the loss of $125 million. Recent reports from blockchain data firm Chainalysis suggest that the exploit may have been an inside job, leaving the cryptocurrency community stunned and searching for answers.

The contract has used an “anySwapFeeTo” function to transfer hundreds of thousands of dollars worth of tokens to itself, which on-chain sleuth Spreek suspected may have been malicious.

Blockchain analytical firm Chainalysis suggested that Multichain's (MULTI) recent exploit could be a rug pull from insiders, according to a July 10 report on the incident. While DeFi hackers have a specific affinity for targeting cross-chain bridges, this one is quite suspicious due to the issues facing Multichain before the incident, according to Chainalysis.