Fantom secures $2.18m in compensation from Multichain Foundation

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As an analyst with a background in blockchain technology and legal research, I find the recent ruling by the Singaporean high court in favor of the Fantom Foundation against Multichain Foundation to be a significant development in the cryptocurrency industry. The case highlights the importance of decentralization and transparency in the crypto space, especially when it comes to handling large amounts of assets.

In a recent decision by the High Court of Singapore, it was determined that the Multichain Foundation is liable to compensate the Fantom Foundation, a prominent layer-1 platform, for financial damages resulting from a hack that occurred in the year 2023.

As a crypto investor, I’m excited about the recent development where the Judicial Commissioner Mohamed Faizal has paved the way for the Fantom Foundation to retrieve the assets that were stolen during the exploit in July. Multichain, the entity responsible for the breach, will transfer around $2.2 million to the foundation, which corresponds to the reported amount of losses.

On July 6, 2023, Multichain experienced significant withdrawals from various cross-chain bridges, among which was the Fantom bridge. An exploit occurred, leading to a loss of approximately $210 million in cryptocurrency assets across different chains such as Ethereum, Binance Smart Chain, Cronos, Polygon, Arbitrum, zkSync, Optimism, and Moonbeam.

As a crypto investor, I’ve been closely following the developments between Fantom Foundation and Multichain. On January 30, 2024, I was pleased to learn that Fantom Foundation obtained a default judgment against Multichain. Ever since then, they have been actively working towards the liquidation of Multichain Foundation with the primary goal of recovering the lost funds for their community.

During the hearing on June 3, Fantom provided proof to back up its assertions. The company alleged that the CEO of Multichain, Zhaojun He, held absolute authority over the digital assets kept in the Multichain Bridge, leading to the reported losses.

As a crypto investor, I’ve come across some disappointing news regarding Multichain. The day after an exploit occurred, Multichain released a statement revealing that their CEO had been in police custody in China for several months. Following this revelation, it was confirmed that the project was not as decentralized as we were led to believe. In reality, the CEO had held significant control over the project.

Additionally, the judgement indicates that Fantom brought legal action against Multichain Foundation Ltd and Multichain Pte Ltd. The complaint alleges that the establishment of Multichain Pte Ltd just prior to the exploit may have been an attempt to unlawfully transfer the misappropriated assets to this new entity.

Faizal didn’t give the accusation much thought, but he recorded that Multichain had acknowledged it on X.

“The [foundation’s] position is that the breach was possible because the CEO of the First Defendant had ultimate privileges and control over the cryptocurrency assets stored in the Multichain Bridge [..] This contravened what the [foundation] contends to be the key term in the User Agreement, which stated that the Multichain Bridge was controlled by decentralised safe and secure [multi-party computation] nodes that are incapable of one-person control,” the commissioner stated.

As a researcher, I’ve discovered that Fantom’s latest estimation of their losses is lower than the initial figure they had announced. Currently, they are determined to persist with their legal actions until a liquidator is appointed to oversee the proceedings.

In the second quarter of 2024, the crypto sector experienced a significant increase of approximately 70.3% in funds stolen through hacks compared to previous quarters. According to Crystal Intelligence’s data, more than $19 billion have been taken illicitly since 2011.

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2024-07-09 12:48