A few days after my article about the Multichain hack, we have some updates on the situation. In this part of the Multichain investigation, we will look at the updates from Fantom Foundation, discuss information about the arrest of Multichainâs CEO, and much more!
How Fantom Foundation Managed the Situation
Fantom Foundation kept being the only one who managed to talk to the community. Unfortunately, what they are saying and doing donât correspond with being community-oriented.
Here is an official Twitter thread from Fantom for you to read:
https://twitter.com/FantomFDN/status/1679103515958943745?embedable=true
Here are the main points from it:
- We know that you guys lost money đ
- There wasnât an âofficialâ bridge on the Fantom chain, hence, we take no responsibility.
- âThe Fantom Foundation will look to seed both Axelar and LayerZero asset pools to encourage protocol liquidity and confidence.â Read as âNo refund for depegged stables, as all money went on new protocolâs liquidityâ
Stargate: âSir, Do You Want a Free NFT?â
Another try of Fantom to gain new liquidity on the chain (except one that they added on their own), is a marketing campaign with Stargate. You can get a useless priceless NFT after bridging $100+ on the Fantom chain.
https://twitter.com/FantomFDN/status/1679520524521676801?embedable=true
Fantom Ecosystem Projects Reaction
Many DEXes and LP farming projects on the Fantom chain now actively integrate with LayerZero/Axelar to get part of the new liquidity in the form of commissions and total value-locked increases.
SpookySwap supports Axelar bridge and farms for both axl-wrapped and lz-wrapped tokens. BeethovenX has added pools to lz-wrapped tokens. WigoSwap has added a pool to axlUSDC.
As we could see, projects are adopting, but thatâs liquidity on the bones of previous Fantom users, who lost their money on the depeg of stablecoins.
Update From Multichain (Finally)
Finally, after a week of silence, we got an extremely intriguing story from the Multichain team! And I think Netflix could make a movie plot just from that thread. Here is the link to Tweet:
https://twitter.com/MultichainOrg/status/1679768407628185600?embedable=true
In a few words, we got the following:
- Multichain CEO Zhaojun was arrested on May 21, 2023.
- The âDecentralizedâ bridge actually was centralized around CEOâs private servers that only he had access to.
- On July 7, user assets locked on the MPC addresses were taken away.
- Zhaojunâs sister said that an IP address from Kunming was found on the cloud server platform.
- She decided to move the rest of the user funds to her own wallets, for safety lol.
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On July 13, Zhaojunâs sister had already been arrested, and the rest of the funds are locked in her wallets.
Iâve created a dashboard on the Arkham platform monitoring the addresses mentioned by Multichain, so you can monitor them as well: Arkham Dashboard Link.
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The multichain team doesnât even have access to their website admin panel. They are asking the domain provider to shut down the website. I think every scammer should know how to shut down the website.
And Iâve read a few comments on Twitter from people that werenât aware of the situation and sent money through the Multichain. Multichain is not operational anymore, donât use it, or your money will be stuck!
Fun Fact: if we look back in May, Multichain Team called the arrest of their CEO a âforce majeureâ first. And they kept working on their own since the arrest of Zhaojun?
https://twitter.com/MultichainOrg/status/1661443109019062272?embedable=true
Fantomâs Reaction to Multichainâs Update
Fantom is disappointed; they said again that part of the assets that got frozen and that they will make further announcements about various activities on the Opera Chain to help the community and builders going forward.
https://twitter.com/FantomFDN/status/1680052789547003904?embedable=true
Conclusion
To sum up, I donât think that affected users would get any kind of a refund, as Fantom Foundation has shown us that they support and incentivize new liquidity for the chain, not the old users that lost their money.
Iâve transferred all of my funds out from the Fantom chain, with a loss of about $1500 caused by depeg.
You decide whether to ape in Fantom right now to get a free NFT or nasty APY on lz-wrapped/axl-wrapped tokens, but you can be sure that Fantom chain wonât be responsible for any possible depeg or issue that could happen.