Fantom Foundation Wins Default Judgment Against Multichain for Breach of Contract and Fraud
The Fantom Foundation has achieved a significant legal victory in its ongoing battle against Multichain, a cross-chain protocol, for breach of contract and fraudulent misrepresentations. The High Court of Singapore has awarded Fantom a default judgment ruling, allowing the foundation to pursue the recovery of $122 million in funds that were lost during a major exploit in July 2023.
Fantom’s Legal Action Against Multichain
Fantom’s decision to take legal action against Multichain came after unsuccessful attempts to engage with the key personnel and directors of Multichain Foundation. After exhausting all other options, Fantom filed a police report in Singapore, where Multichain is incorporated, and in Kunming, where Multichain and its founder are currently under investigation. The foundation accused Multichain of a lack of cooperation following the exploit, which led to the decision to pursue legal action.
Default Judgment Ruling Granted
Fantom announced the default judgment ruling in a blog post, expressing satisfaction with the High Court of Singapore’s decision. The ruling, which was effective from the 30th of November, 2023, provided Fantom with a favorable outcome in their legal battle against Multichain. In the blog post, Fantom shared their statement:
“Since the July 2023 Multichain exploit, Fantom Foundation’s management and legal team have been working tirelessly across multiple jurisdictions to chart a path forward that enables victims to partially recover assets lost. We have an important update in this regard. We are pleased to announce that on the 30th of January, 2024 (effective as of the 30th of November, 2023), the Honorable Registrar Tan Boon Heng of the General Division of the High Court of Singapore granted a default judgment ruling in Fantom’s favor.”
Fantom’s Plan for Liquidation
Following the default judgment ruling, Fantom intends to have the Multichain Foundation declared bankrupt by the High Court of Singapore. This move is aimed at recovering the $122 million that was stolen from Multichain’s Fantom Bridge during the exploit in 2023. Fantom detailed its plans in the blog post:
“Given the recent ruling, we will use the Fantom Foundation’s own financial losses to petition the court to wind up the Multichain Foundation and appoint a liquidator (equivalent to a Chapter 7 bankruptcy in the US) to help recover and distribute missing or frozen assets.”
If the court agrees to Fantom’s petition, a liquidator will be appointed to take control of Multichain Foundation’s assets and use them to repay any creditors it owes.
Reaching Out to Affected Users
While the default judgment ruling only applies to Fantom’s own losses, the foundation plans to leverage this legal victory to encourage other affected users to make their claims against Multichain. Multichain has not yet responded to the court’s judgment. Blockchain security firm Beosin estimated that Multichain suffered a total loss of $210 million during the exploit. Chainalysis, a blockchain security firm, speculated at the time of the incident that compromised administrator keys could have been the cause, suggesting the possibility of an inside job.
Takeaway: Fantom Foundation Prevails in Legal Battle Against Multichain
The Fantom Foundation can celebrate a major victory with the default judgment ruling in its favor against Multichain. This ruling opens up possibilities for the recovery of the significant amount of funds lost during the exploit. By pursuing liquidation of the Multichain Foundation, Fantom aims to secure the necessary means to repay itself and other affected parties.
Hot Take: Multichain Faces Consequences for Breach of Contract and Fraud
The default judgment ruling against Multichain serves as a strong reminder that the consequences of breaching contracts and engaging in fraudulent activities can be severe. Fantom’s success in seeking legal redress shows the commitment of the foundation in protecting its assets and rights. This ruling is not just a win for Fantom but also sets a precedent for other crypto projects to pursue justice in the face of similar situations. Multichain’s response to this ruling will be closely watched by the crypto community.
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