The ongoing crisis surrounding blockchain bridge MultiChain deepens as recent rumors suggest that Chinese authorities have arrested team members and potentially have control over a wallet containing upwards of $1.6 billion. With little clarity on whether the arrests happened and why, authorities have remained tight-lipped, and the specifics of the situation remain mostly confined to Chinese-language platforms. Amidst the uncertainty, Binance, the world’s largest crypto exchange, has acted to suspend withdrawals for several of the bridge’s tokens while waiting for clarity from the Multichain team.
Multichain, formerly known as Anyswap before an $8 million exploit in 2021, is among the largest blockchain bridges in the crypto space, enabling the exchange of tokens across multiple networks, including Binance Chain, Avalanche, Polygon, and Ethereum. With $1.5 billion total value locked, according to DefiLlama, there is growing concern over the potential impact on the broader crypto ecosystem.
One area of particular unease revolves around Fantom, a smart contract-supporting blockchain powered by its native FTM token. Thirty-five percent of its assets are issued by Multichain, including 80% of its total stablecoin market cap, as per research firm Thanefield Capital. Consequently, worries are mounting that the bridge’s potential shutdown could significantly impact Fantom and other networks.
Despite the increasing concerns, the market seems to be holding steady, with researcher Defi Ignas noting that there is little panic among investors. While rumor-fueled daily bridged volume saw a 520% spike, deposits exceeded withdrawals by $18 million, citing DeFi Llama data. Nonetheless, the anxiety around Multichain’s crisis is palpable among investors.
Dovey Wan, founder of crypto investment fund Primitive Ventures, highlighted on Twitter that Mainland China has been cracking down on local operating crypto projects, going after those deemed “rich” or having sizable funds under custody. The current situation once again emphasizes the regulatory risks present within the industry.
Ethereum co-founder Vitalik Buterin, while not directly addressing the Multichain crisis, has previously cautioned users about relying on cross-chain bridges. In a recent blog post, Buterin advised users to minimize their reliance on bridges and to hold assets on the chain where they originated.
As the situation develops, the crypto community continues to await further information, underscoring the importance of ongoing vigilance around regulation and potential market disruptions. The Multichain crisis demonstrates the delicate balance between technological innovation and the various hurdles that come with operating within the innovative and often unpredictable world of cryptocurrencies.
Source: Decrypt
