The Fantom Foundation has formally approached the Singapore High Court with a request to initiate the bankruptcy of the Multichain Foundation. The goal of this action is to facilitate the recoupment of $122 million that was illicitly taken from Multichain’s Fantom-based cryptocurrency bridge in the previous year.
Fantom’s Legal Strategy and Expectations
On March 4, the Fantom Foundation made a public declaration, stating that following a default judgment by the Singapore High Court on January 30, which highlighted the loss of $122 million from Multichain due to mismanagement, the Foundation is seeking to appoint a liquidator to handle the asset recovery and distribution process. This move is akin to filing for Chapter 7 bankruptcy in the United States.
The Foundation anticipates that the court will calculate the financial damages owed to Fantom and mandate Multichain to compensate. The blog post by the Foundation on March 4 underlined that payment from Multichain is not anticipated, and thus, the role of a liquidator is crucial.
Should the court authorize the appointment, the liquidator would assume control of Multichain Foundation’s assets, with the potential to reverse transactions and take charge of assets specifically for reimbursing creditors. The decision is expected to influence not only Fantom’s losses but also pave the way for claims by all affected users.
The Extent of Multichain’s Security Breach
Blockchain security firm Beosin, alongside Fantom, estimated that Multichain’s total losses due to security breaches amounted to $210 million. The protocol, which facilitated the transfer of funds across multiple blockchains, suffered unauthorized withdrawals last July. Analysis at the time suggested the possibility of an insider job involving compromised administrative keys.
Amid these developments, a report was filed in China alleging that Multichain and its founder were under active investigation, with the founder being arrested two months prior to the incident under undisclosed charges. Multichain has yet to comment on the court decision.
