- Multichain has declared that it has been “forced to cease operations” due to a lack of operational funding.
- Zhaojun’s sister informed the team of an asset preservation act and transferred some money to accounts under her control.
Multichain, a cross-chain bridging protocol, has declared that it has been “forced to cease operations” due to a lack of operational funding. The disclosure comes in response to a Chainalysis study that claimed that insiders appear to be pulling a “rug pull” in terms of withdrawals.
Multichain finally declared that it would cease operations on July 14 via its official Twitter account. The team claimed that they were compelled to cease operations due to “a lack of alternative sources of information and corresponding operational funds.”
On May 21, Zhaojun was “taken away” by Chinese police, according to Multichain, who also seized his laptops, phones, hardware wallets, and mnemonic phrases. It stated that his sister had been arrested on Thursday.
The team also emphasized in the tweet that their CEO, identified as “Zhaojun,” has not been in communication with the Multichain Worldwide team since he was taken into custody by Chinese authorities. They noted:
“Since the inception of the project, all operational funds and investments from investors have been under Zhaojun’s control. This also means that all the team’s funds and access to the servers are with Zhaojun and the police.”
Zhaojun’s sister informed the team of an asset preservation act and transferred some money to accounts under her control, they said. The family of the Multichain CEO then informed the team that Zhaojun’s sister had also been arrested by the police and was currently out of communication. The team consequently declared that it is currently ceasing activities.
When Multichain routes were blocked due to an update in May, fund transfers started taking longer than intended. This was when the Multichain disaster began. Following this, due to the unpredictability of the protocol, the cryptocurrency exchange Binance stopped supporting deposits and withdrawals for specific Multichain bridging tokens.
The platform’s situation was made worse by significant outflows from the Multichain MPC bridge platform, which raised concerns about an exploit. On July 6, after more than $100 million worth of assets were taken out of the protocol’s Fantom bridge on the Ethereum side, on-chain monitors came to the conclusion that the system had been compromised.