Key Takeaways
- The service disruption, attributed to a “force majeure,” has caused certain cross-chain routes to become unavailable, leaving users unable to complete transactions.
- Multichain stated that most cross-chain routes were still functioning correctly and that pending transactions would be credited automatically once service was restored.
In a recent development, Multichain, a cross-chain protocol designed to facilitate inter-blockchain communications, is facing criticism and a significant sell-off as users experience a service disruption. The protocol’s team has promised compensation for affected users, but concerns and rumors have fueled uncertainty in the market.
The service disruption, attributed to a “force majeure,” has caused certain cross-chain routes to become unavailable, leaving users unable to complete transactions. Multichain acknowledged the problem in an operational update, citing a longer-than-expected upgrade to a back-end node as the cause.
The team emphasized that most cross-chain routes were still functioning correctly and that pending transactions would be credited automatically once service was restored. As users voiced complaints about stuck transactions as early as May 21, Multichain’s MULTI token experienced a significant decline of 23.6% in value, plummeting to $5.41, according to CoinGecko data.
The service disruption prompted several prominent crypto entities to take action. Fantom Foundation, a layer-1 blockchain developer, withdrew $2.4 million in liquidity of the protocol’s native MULTI tokens from the decentralized exchange SushiSwap. Chinese crypto investment firm HashKey Group moved $250,000 to crypto exchange Gate.io, while Tron founder Justin Sun withdrew 470,000 USDD, a stablecoin, from the protocol itself.
The sell-off intensified on May 24, causing the token price of Multichain (MULTI) to plummet by 30% over a 24-hour period, trading at $4.97 at the time of publication. Users reported delays in their multichain funds due to the extended back-end node upgrade. Although most routes were functioning as usual, certain routes, including Kava, zkSync, and Polygon zkEVM, were temporarily suspended.
The sell-off was further fueled by rumors circulating in the community. One widely shared tweet alleged that the Multichain team had been arrested by Chinese authorities, holding control over $1.5 billion of contract funds. However, no credible evidence has been presented to support these claims.
Blockchain analytics firm Lookonchain reported MULTI outflows worth at least $3 million from smart money accounts on the same day. Notably, Fantom Foundation withdrew approximately 449,740 MULTI tokens ($2.4 million) from SushiSwap liquidity, while another address associated with the ENS name hwg.eth sold over 36,000 MULTI tokens, amounting to $200,000.
Since its establishment in July 2020, Multichain has garnered significant attention and surpassed $1.59 billion in total value locked (TVL). The protocol achieved a peak TVL of $10.5 billion in early 2022 before the onset of the cryptocurrency bear market.
