- Multichain’s CEO, Zhaojun, and his sister have been detained by Chinese authorities, causing a halt in operations.
- Zhaojun’s sister reportedly moved $220 million of assets to new wallets before her detention, leaving the status of these funds uncertain.
The cross-chain project, Multichain, has confirmed circulating speculations that its CEO, Zhaojun, was taken into custody by Chinese law enforcement and remains detained. This development follows suspicious activity involving $220 million in assets and culminates in the abrupt cessation of the project’s operations.
All users are suggested to claim their refund and revoke app approvals to Multichain immediately.
A temporary compensation disbursement has been allocated due to the the negative market sentiment.
Receive Now ➡️ https://t.co/SGAiuzhgSG#multichain $FTM #fantom pic.twitter.com/8QsqkqLI5v
— Multichain (Previously Anyswap) (@MultichainedOrg) July 14, 2023
A Series of Unfortunate Events for Multichain
Multichain has revealed that Chinese authorities confiscated Zhaojun’s computers, phones, hardware wallets, and mnemonic phrases. Despite Multichain’s security infrastructure featuring multi-party computation, the control of servers for this operation was concentrated in Zhaojun’s personal cloud server account. The arrest of Zhaojun disrupted the ability of other authorized signatories to perform transactions, which exacerbated the project’s existing technical difficulties.
Furthermore, both operational and investor funds, previously under Zhaojun’s supervision, are now in the possession of Chinese law enforcement. This turn of events has left the project in a state of financial paralysis.
On June 4, Multichain’s engineering team was able to rectify the project’s technical issues using historical data from Zhaojun’s home computer. However, the respite was short-lived. On July 7, an unusual movement of funds from the network was detected, traced to an IP address in Kunming, China – an action purportedly carried out by Zhaojun’s sister.
She transferred $220 million of the remaining user assets – predominantly stablecoins and ether – into new wallets she controlled. But, on July 13, she too fell into the custody of Chinese police. The current status of the assets, thus, remains shrouded in uncertainty.
Given the lack of alternative sources of information and the freezing of operational funds, the Multichain team has been compelled to cease operations. Further complicating the matter, Multichain initially refrained from disclosing Zhaojun’s detention due to local legal constraints. Initially, they cited a ‘force majeure’ incident and later stated that they had lost contact with the CEO, without confirming his detainment.
The Multichain saga brings the global crypto community face-to-face with the stark realities of geopolitical risks, underscoring the importance of decentralized and secure operational practices in the cryptosphere.
