Cross-chain protocol Multichain has announced that it is “forced to cease operations” due to a lack of operational funds. The announcement follows a report from blockchain analytics firm Chainalysis saying that withdrawals appear to be a “rug pull” by insiders.
On July 14, Multichain’s official Twitter account announced that it would be halting its operations. The team said that a “lack of alternative sources of information and corresponding operational funds” has forced it to shut down its business activities.
It also highlighted that the global Multichain team had not had contact with their CEO, known as Zhaojun, since he was detained by Chinese police. According to the team, they contacted the CEO’s family and learned that Zhaojun’s computers, phones, wallets, and mnemonic phrases were seized by the authorities. They wrote, "Since the inception of the project, all operational funds and investments from investors have been under Zhaojun’s control. This also means that all the team’s funds and access to the servers are with Zhaojun and the police.”
The Multichain debacle started in May when Multichain routes were suspended due to an upgrade, with fund transfers taking longer than expected. Following this, crypto exchange Binance halted deposit and withdrawal support for some Multichain bridged tokens because of the uncertainties surrounding the protocol.
To make matters worse for the platform, large outflows from the Multichain MPC bridge platform sparked fears of an exploit. On July 6, on-chain observers concluded that the protocol was hacked as over $100 million worth of assets were withdrawn from its Fantom bridge on the Ethereum side.
