Cross-chain protocol Multichain has announced that it is ceasing operations due to a lack of operational funds. The decision came after a report from Chainalysis suggested that withdrawals may have been a “rug pull” directed by insiders.
Multichain CEO Zhaojun was taken away by Chinese police on May 21, 2023, and hasn’t been in contact since. The team lost access to the MPC node servers, which were under Zhaojun’s cloud server account. His family confirmed that his devices and control over funds were confiscated.
The team operated with limited resources and released news of Zhaojun’s disappearance on May 30. User assets on MPC addresses were abnormally transferred on July 7, and later, Zhaojun’s sister transferred the remaining assets to addresses 0x6b6314f4f07c974600d872182dcde092c480e57b and 0x1eed63efba5f81d95bfe37d82c8e736b974f477b, which she controlled.
The team learned that Zhaojun’s possessions, including computers, phones, wallets, and mnemonic phrases, were seized by the authorities. As all operational funds and investments were under Zhaojun’s control, the team no longer had access to funds or servers. They discovered that some funds were transferred to addresses controlled by Zhaojun’s sister.
Consequently, Multichain announced the halt of its operations. The protocol’s routes were suspended for an upgrade in May, resulting in delayed fund transfers. Binance, a cryptocurrency exchange, suspended deposit and withdrawal support for certain Multichain bridged tokens due to the uncertainties surrounding the protocol.
In a recent report, multichain experienced a security breach resulting in a loss of approximately $130 million. The exploit involved the attacker siphoning funds from multiple token bridges, primarily the Fantom bridge, leading to significant outflows. Users were advised to suspend Multichain services, and an investigation is underway.
However, on July 13, Zhaojun’s sister was also taken into custody, leaving the status of her preserved assets uncertain. Due to a lack of information and funds, the team is ceasing operations and will provide updates if available.