- Fantom Foundation aims for Multichain Foundation’s insolvency declaration to recover $122 million lost in a July 2023 exploit.
- Singapore High Court granted Fantom a default judgment against Multichain for breach of contract, paving the way for asset recovery through liquidation.
- Fantom intends to use this legal victory to enable all affected users to lodge claims against Multichain despite focusing on its own financial losses.
The Fantom Foundation is pursuing legal action to compel the Singapore High Court to declare the Multichain Foundation insolvent. This move is seen as a strategy to recover $122 million lost in an exploit of Multichain’s Fantom bridge in July 2023.
The High Court of Singapore awarded a default judgment to Fantom on January 30, favoring their legal stance against Multichain for breach of contract and fraudulent misrepresentations. Fantom aims to have a liquidator appointed, similar to filing for Chapter 7 bankruptcy in the U.S., to oversee the retrieval and allocation of assets that are either missing or have been frozen.
The court’s judgment allows for the assessment of damages owed to Fantom and the demand for repayment from Multichain. Fantom has expressed skepticism regarding Multichain’s ability to repay the losses and plans to proceed with appointing a liquidator. This liquidator would have the authority to take control of Multichain Foundation’s assets and recover funds for the benefit of creditors.
Despite the court’s decision focusing solely on Fantom’s losses, the foundation aims to utilize this legal victory as a precedent for all affected users to claim against Multichain. Fantom has pledged to advance the legal process until a liquidator is appointed. As of now, Multichain has not responded to requests for comment on the judgment.
The security breach under scrutiny, leading to a staggering $210 million in losses, spanned several blockchain ecosystems, notably Ethereum, Polygon, and others, stemming from unauthorized transactions via the Multichain bridge. Analysis by Beosin and Fantom estimated the total losses, underscoring the protocol’s role in facilitating asset transfers across these diverse networks.
The investigation’s complexity was further heightened by Chainalysis, a blockchain analytics firm, which suggested compromised administrator keys as a potential cause. This insight hinted at the possibility that the exploit was an orchestrated “inside job.”
Since the exploit, Fantom has been actively seeking ways to recover the lost assets. This included filing reports with the police in Singapore, where Multichain is incorporated, and initiating legal action against the company. A related investigation is ongoing in China against Multichain and its co-founder Zhaojun He, who was arrested on unrelated charges prior to the exploit. His current status remains unclear despite activity on his Telegram account.
Meanwhile, the cryptocurrency sector saw another significant security breach emerge, this time affecting ShidoGlobal, with over 4 billion SHIDO tokens unauthorizedly withdrawn. The breach followed a change in ownership to a new entity identified by address 0x1982, which introduced a ‘withdrawToken’ function in the StakingV4Proxy contract update, facilitating the token extraction.
