Fantom Foundation Aims for Multichain's Bankruptcy to Regain $122M Lost in 2023 Hack
Summary:
Fantom Foundation seeks the bankruptcy of Multichain Foundation through the Singapore High Court, hoping to recover $122 million lost from a 2023 hack. Given the court's judgment in Fantom's favor, it plans to use its own financial losses to prompt the assignment of a liquidator to recover unavailable assets to pay its creditors. In the coming months, Fantom also aims to provide a platform for all users to lodge claims against Multichain. Following the hack, preliminary investigations have drawn speculations of compromised administrator keys or an 'inside job.'
Fantom Foundation is seeking a bankruptcy declaration for Multichain Foundation from the Singapore High Court, with its hopes pinned on recuperating the whopping $122 million swindled from Multichain’s Fantom bridge in the previous year. On March 4, Fantom revealed that the Singapore High Court had delivered a default judgment in its favor on January 30, over its lawsuit against Multichain for accusations of contract infringement and deceptive implications, following Fantom's assertation that Multichain misplaced $122 million of its resources in July 2023 due to a security loophole.
Fantom notes that based on the recent court decision, it intends to leverage its own economic setbacks to motivate the court to shut down Multichain Foundation and assign a liquidator, equivalent to a U.S Chapter 7 insolvency, to aid in reclaiming and distributing the unavailable or seized assets. The court is set to evaluate the damages Multichain owes Fantom and will demand restitution from the former.
If approved, the appointed liquidator will assume Multichain Foundations assets, reverse transactions and recover any remaining assets with the ultimate goal of settling its debtors. In the aftermath of the July 2023 Multichain security breach, Fantom Foundation's administrative and legal personnel have been relentlessly pursuing possible strategies across numerous jurisdictions to support victims in regaining a portion of their lost assets.
According to Fantom, the court's verdict pertains solely to its losses. Nonetheless, it aspires to leverage this legal triumph to forge a pathway for all users to file legal complaints against Multichain. Over the coming months, it aims to advance the case until a liquidator is appointed. Multiple attempts to get a response from Multichain on the court's ruling proved futile.
Blockchain security specialist Beosin, in concert with Fantom, estimated Multichain’s total hacks to sum up to $210 million. Following a series of unauthorized cash withdrawals in July last year, analysts speculated that compromised administrator keys might be the cause or that it could be an inside job. Since then, Fantom has worked industriously to locate a method for asset recovery which incuded starting legal proceedings against Multichain Foundation where it is registered and lodging a report with the Singapore police. It additionally reported the case to the Chinese police where an ongoing investigation into Multichain and its co-founder, Zhaojun He, presumed to have been arrested on unspecified charges in May 2023, is underway. His Telegram account was active in January, but it's not verified whether he was the user.
Published At
3/5/2024 5:22:12 AM
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