Fantom Foundation To Pursue Multichain's Liquidation After Winning Default Judgment

Multichain suffered a nine-figure exploit after its CEO went missing last year.

By: Samuel Haig Loading...

Fantom Foundation To Pursue Multichain's Liquidation After Winning Default Judgment

The Fantom Foundation plans to seek the liquidation of the Multichain Foundation, the organization behind the cross-chain bridge that suffered a nine-figure exploit last year, after winning a default judgment against the project in Singapore.

On March 4, Fantom Foundation announced it had been granted a default judgment against the Multichain Foundation on Jan. 30 after filing an action for breach of contract and fraudulent misrepresentations for losses suffered by Fantom.

Fantom Foundation said the action followed unsuccessful attempts to engage “former directors and key personnel” from the Multichain Foundation, with roughly one-third of the missing funds belonging to the Fantom ecosystem.

Moving forward, the Singapore Court will quantify Fantom’s damages and issue a Statutory Demand to Multichain to compensate the losses. However, Fantom expects to pursue liquidation proceedings against Multichain Foundation on behalf of all parties affected by the exploit.

“Given the persistent absence of Multichain, we do not expect this to occur, at which point the Foundation will petition the court to wind up the Multichain Foundation and appoint a liquidator,” Fantom Foundation tweeted. “While the current judgment relates only to Fantom Foundation’s own losses, the Foundation aims to use this legal victory to pave a path for all users to lodge their claims against Multichain and have suitably qualified experts recover and distribute assets.”

Fantom Foundation said the liquidator will possess expertise in tracing and recovering assets, and hold the legal powers to “claw back and recover bridge assets, assess and manage claims, and distribute any recovered funds.” The organization noted the existence of roughly $65 million in frozen stablecoins held by the Multichain Foundation.

Multichain's collapse

Multichain’s woes quickly escalated in mid-2023, starting with rumors that its CEO had been arrested as bridge users reported that pending transactions were piling up in May.

In July, Multichain announced that digital assets worth $121 million had been “abnormally” moved to “an unknown address,” urging users to cease using the protocol and revoke all Multichain contract approvals. The incident comprised the 15th largest DeFi exploit by fiat value, according to Rekt.

Fantom Foundation, which endorsed Multichain as the primary bridge protocol for its Layer 1 network, Fantom, now estimates the value of missing assets at $210 million. According to DeFi Llama, Multichain held $1.25 billion worth of assets in its smart contracts at the time of the incident.

Fantom was among the Layer 1 networks hardest hit by the recent bear market. Its total value locked (TVL) peaked at $12.4 billion in January 2022 and has since crashed nearly 99% to $143 million.