- Gate.io faced insolvency allegations due to its alleged association with the cross-chain router protocol Multichain (MULTI).
- These rumours have been refuted by Gate.io, with claims that “operations are running healthily.”
Gate.io, a crypto exchange platform, has refuted rumors of liquidity issues following an investigation by the police. The platform experienced an outflow of $150 million in the past 24 hours, approximately 10% of its net reserve assets. Speculation on Twitter had suggested that Gate.io was facing insolvency due to its association with the cross-chain router protocol, Multichain (MULTI).
However, the exchange clarified that its operations were running smoothly and emphasized its efforts to establish a related trading platform in Hong Kong, known as Gate.HK.
According to Arkham Intelligence, a separate blockchain project called Multichain transferred $3 million worth of the MULTI token to Gate.io. Arkham also reported other transactions involving Multichain-related tokens, some of which were subsequently halted for deposit on the popular exchange Binance.
Deposits for a number of bridging tokens that used the Multichain protocol were suspended by Binance on May 25. These tokens included bridged versions of Polkastarter (POLS), Alpaca Finance (ALPACA), and Fantom (FTM). While waiting for clarification from Multichain, Binance reported certain tokens were experiencing delayed transactions and temporarily froze deposits.
While Arkham did not directly state that Gate.io was facing any risks, these market activities and other occurrences fueled speculations. Coinsumption, a Twitter account with nearly 31,000 followers, suggested on May 31 that Gate.io was experiencing solvency issues and advised users to withdraw their funds from the exchange.
The price of GateToken (GT), the native token of crypto exchange Gate.io, has witnessed a significant decline of approximately 10% amid rumors of its involvement in the Multichain incident. Gate.io experienced a substantial outflow of $148 million within a 24-hour period, and this trend appears to be continuing with further withdrawals from the platform.
DeFiLlama reports that Gate.io has had the highest rate of outflows among the top 10 centralised exchanges. Outflows for a week and a month totaling $176.3 million and $222.7 million, respectively, are likewise very significant.
To address the situation and alleviate concerns, Gate.io’s team released a statement, as reported by Bloomberg, refuting any involvement in the Multichain incident and providing updates on recent activities.
Gate.io’s spokesperson emphasised that the platform’s employees are currently occupied with preparations for the upcoming 10-year anniversary of their platform.
Additionally, they are focused on completing the necessary paperwork, including obtaining a Virtual Asset Service Provider (VASP) license, for the launch of their new trading platform in Hong Kong, which will cater specifically to the Hong Kong market.