Multichain says it’s ceasing operations, MULTI price falls

• Multichain protocol says its forced to cease operations due to recent events.
• CEO Zhaojun and his sister have reportedly been detained leaving the team with no operational funds.
• Multichain saw $125 million stolen on July 6, with blockchain security firm Chainalysis pointing to possible rug pull by insiders.

Multichain, one of the world’s largest cross-chain bridge protocols, has announced its ceasing operations. The news comes just days after the protocol saw an attacker (looked like an inside job) drained $125 million from the protocol’s wallets. 

According to a Chainalysis report, the mysterious withdrawals on July 6 included $120 million from Multichain’s Fantom bridge. The blockchain security firm noted in its report that the “unusually large, unauthorized withdrawals” looked like a rug pull. 

As CoinJournal covered here, an earlier incident with the Multichain protocol had seen the world’s largest crypto exchange Binance halt deposits and withdrawals of Multichain bridged tokens.

Multichain halts operations

Multichain has constantly been in the news over the past few months, particularly since May when it was reported that the CEO Zhaojun had been arrested by Chinese police. 

It was alleged authorities confiscated “computers, phones, hardware wallets, and mnemonic phrases” when they took the CEO into custody. Notably, Zhaojun had control over all of the protocol’s operational funds and investments.

1. On May 21, 2023, Multichain CEO Zhaojun was taken away by the Chinese police from his home and has been out of contact with the global Multichain team ever since. The team contacted the MPC node operators and learned that their operational access keys to MPC node servers had…

— Multichain (Previously Anyswap) (@MultichainOrg) July 14, 2023

Zhaojun’s sister, who recently transferred remaining user assets to an address under her control, has also been detained. It is this series of events and the “lack of alternative sources of information and corresponding operational funds” that has forced Multichain to cease operations, an announcement posted on the protocol’s Twitter page noted.

“On July 13, according to information provided by Zhaojun’s family, the police took Zhaojun’s sister into custody. Now, Zhaojun’s sister is also out of contact. The status of the assets she has preserved is uncertain, so the team believes it is necessary to inform the community about all the known circumstances. Due to the lack of alternative sources of information and corresponding operational funds, the team is forced to cease operations.”

The price of Multichain (MULTI) was down 4% in the past 24 hours and over 16% in the past week on Friday morning. What happens next to MULTI is uncertain, but it’s likely to plummet further. Recent suspicions of rug pull moves haven’t helped prices.