Speculation have been swirling since yesterday morning that Chinese authorities arrested Multichain team members and that law enforcement now has control of a wallet containing upwards of $1.6 billion, reportsย by several Twitter accounts.
Whether the arrest happened or why remains unclear, although it has forced corporations to act. Binanceย Cryptoย exchange has stepped in to address the situation, suspending withdrawals for plentyย of of the bridgeโs cryptoย tokens. The worldโs largest cryptocurrency exchange stated it will โawait clarity from the Multichain team.โ
Multichainโknown as Anyswap before it suffered an $8 Million exploit in 2021โ is one of the major blockchainย tech bridges in cryptocurrency, facilitating the exchange of cryptoย tokens across numerous networks. Itย enablesย for ecologicalย systems such as Binanceย Cryptoย exchange Chain, Avalancheย (AVAX), Polygon, and Ethereumย (ETH) to interact with one another.
As of this writing it has $1.5 Billion total value locked, reportsย by DefiLlama.
For most of yesterday and today the Multichain official social media account has been silent. Chinese authorities have provided no information on the matter, though itโs worth pointing out that details have mostly been shared on Chinese-language platforms and been slow to make it to English-language outlets.
Now Fantom, aย smart contract-supporting blockchainย tech powered by its native FTM cryptoย token, hasย evolved one area for concern. Thirty- 5 % of its assets are announced by Multichain, including 80 percent of its total cryptoย stablecoin marketย capitalization, reportsย by research company Thanefield Capital.
The Fantom team hasnโt stated much about Multichain on social media except a brief tweet yesterday stating the bridge was โoperating as normal.โ Theย group did not instantly reply to Decryptโs request for comment.
Fantom Foundation Director Andre Cronje informed The Block that the team withdrew $2.4 Million worth of MULTI cryptoย tokens from SushiSwap yesterday because โno point to LP at times of uncertainty.โ
Blockchainย Tech analytics company Arkham Intelligence noted onย Twitterย platform that wallets belonging to some of the largest MULTI cryptoย token holders, including HashKey Group, have shifted approximately $3 Million in the last 24 hours.
As questions mount, Multichain is feeling the heavy pressure of record-high daily volume as fears mount that the bridge canย potentially shut down. Despiteย theย factย that the platform still shows a high amount of total value locked (TVL), there seemsย to be little panic within the market, reveals researcher Defi Ignas, who dug into on-chain data.
Speculation about possible arrests in Shanghai yesterday prompted a 520 percent spike in daily bridged volume, but deposits hadย moreย than withdrawals by $18 Million dollars, Ignas wrote, citing Decentralizedย Finance Llama data. Despiteย theย factย that some on-chain data doesnโt show much outflow of financialย resources, the Multichain crisis has caused alarm between investors.
โItโs sad but true that in mainland China, thereย is ongoing action against ANY local operating cryptocurrency projects including infra, [decentralized apps], Decentralizedย Finance beyond just [centralized exchanges], wallet or miningโ Dovey Wan, founder of cryptocurrency aย fundย ofย financing Primitive Ventures, wrote onย Twitterย platform. He wentย onย toย say: โAny local gov can go after any cryptocurrency project they deem โrichโ or have sizable funds under custody.โ
Vitalik Buterin, co- founder of Ethereumย (ETH), has not weighed in to theย present Multichain crisis, but had words of caution in the past on relying on cross-chain bridges. He wrote in a blogย post over the weekend that users should โtry to minimize how much you rely on bridges at all,โ adding that users should try to โhold assets on the chain where they originate.โ
This story isย still developing.
