$1.5B DeFi Bridge Causes Panic with Multichain Shift to Fantom

$1.5B DeFi Bridge Causes Panic with Multichain Shift to Fantom

Chinese authorities reportedly arrest Multichain team members and seize control of a wallet containing upwards of $1.6 billion, causing Binance to suspend withdrawals for several of the bridge’s tokens, and raising concerns for Fantom, which has 35% of its assets issued by Multichain.

The crisis continues  for blockchain tech bridge Multichain.

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, reports by several Twitter accounts.

Whether the arrest happened or why remains unclear, although it has forced corporations to act. Binance Crypto exchange has stepped in to address the situation, suspending withdrawals for plenty of of the bridge’s crypto tokens. The world’s largest cryptocurrency exchange stated it will “await clarity from the Multichain team.”

Multichain—known as Anyswap before it suffered an $8 Million exploit in 2021— is one of the major blockchain tech bridges in cryptocurrency, facilitating the exchange of crypto tokens across numerous networks. It enables  for ecological systems such as Binance Crypto exchange Chain, Avalanche (AVAX), Polygon, and Ethereum (ETH) to interact with one another.

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As of this writing it has $1.5 Billion total value locked, reports 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 it’s 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, a smart contract-supporting blockchain tech powered by its native FTM crypto token, has evolved one area for concern. Thirty- 5 % of its assets are announced by Multichain, including 80 percent of its total crypto stablecoin market capitalization, reports by research company Thanefield Capital.

The Fantom team hasn’t stated much about Multichain on social media except a brief tweet yesterday stating the bridge was “operating as normal.” The group did not instantly reply to Decrypt’s request for comment.

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Fantom Foundation Director Andre Cronje informed The Block that the team withdrew $2.4 Million worth of MULTI crypto tokens from SushiSwap yesterday because “no point to LP at times of uncertainty.”

Blockchain Tech analytics company Arkham Intelligence noted on Twitter platform that wallets belonging to some of the largest MULTI crypto 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 can potentially shut down. Despite the fact that the platform still shows a high amount of total value locked (TVL), there seems to be little panic within the market, reveals researcher Defi Ignas, who dug into on-chain data.

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Speculation about possible arrests in Shanghai yesterday prompted a 520 percent spike in daily bridged volume, but deposits had more than withdrawals by $18 Million dollars, Ignas wrote, citing Decentralized Finance Llama data. Despite the fact that some on-chain data doesn’t show much outflow of financial resources, the Multichain crisis has caused alarm between investors.

“It’s sad but true that in mainland China, there is ongoing action against ANY local operating cryptocurrency projects including infra, [decentralized apps], Decentralized Finance beyond just [centralized exchanges], wallet or mining” Dovey Wan, founder of cryptocurrency a fund of  financing Primitive Ventures, wrote on Twitter platform. He went on to say: “Any local gov can go after any cryptocurrency project they deem ‘rich’ or have sizable funds under custody.”

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Vitalik Buterin, co- founder of Ethereum (ETH), has not weighed in to the present Multichain crisis, but had words of caution in the past on relying on cross-chain bridges. He wrote in a blog  post over the weekend that users should “try to minimize how much you rely on bridges at all,” adding that users should try to “hold assets on the chain where they originate.”

This story is still developing.


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