Multichain Faces Major Security Breach: Operations Halted After $122 Million Loss

• Withdrawals totaling approximately $102 million were observed from Multichain’s Fantom bridge on the Ethereum side.
• The Multichain Moonriver bridge contracts experienced a withdrawal of $5,872,661, resulting in approximately $700,000 left on the platform.

On July 6, the crypto community and blockchain analysts noticed significant outflows from the Multichain MPC bridge platform, raising suspicions of a potential exploit involving millions of dollars. Notably, withdrawals totaling approximately $102 million were observed from Multichain’s Fantom bridge on the Ethereum side. 

Furthermore, the Dogechain bridge experienced a withdrawal of $666,000, while the Multichain Moonriver bridge contracts witnessed outflows totaling $5,872,661.The withdrawals from the Fantom bridge’s Ethereum smart contract consisted of 7,214 Wrapped Ether (WETH) tokens with an approximate value of $13.6 million, 1,024 Wrapped Bitcoin (WBTC) worth around $31 million, and $58 million worth of US Dollar Coin (USDC). 

Concerning the Dogechain bridge’s Ethereum contract, the withdrawal amounted to $666,000, which accounted for over 86% of the total deposits, leaving only approximately $100,000 remaining in assets. Similarly, the Multichain Moonriver bridge contracts experienced a withdrawal of $5,872,661, resulting in approximately $700,000 left on the platform.

Multichain’s Response and Commitment to Investigate Abnormal Transactions

The unusual outflows prompted speculation among investigators and observers in the blockchain industry, leading to concerns regarding a potential exploit or hack. Notably, Peckshield, a renowned blockchain security firm, shared the transactions from the Fantom bridge on Twitter and tagged the Multichain team, urging them to investigate the matter. This prompted one commenter to label it as “another massive hack.” 

Furthermore, renowned crypto analyst Colin Wu, who cited data from deExplorer, there are reports of users utilizing DLN Trade to exchange assets on the Fantom chain for assets on different chains at a reduced rate. Recent transactions indicate that Fantom 1 USDC can be converted into BSC 0.9 USDC, Polygon 0.88 USDT, and other similar conversions, offering an approximate 10% discount.

However, it is important to note that, at the time of publication, there was no confirmation as to whether the contracts were completely emptied or if authorized users made the withdrawals. In a subsequent tweet, Multichain acknowledged the abnormal nature of the transactions and expressed uncertainty about the cause. 

The team reassured their followers that an investigation was currently underway. Multichain operates as a multi-party computation (MPC) bridging network, where assets are locked on one chain while derivative assets are created on another.

Multichain’s Recent Challenges

In recent weeks, Multichain has experienced unspecified technical difficulties. On May 31, the company announced that their CEO was missing, and they were facing various challenges due to unforeseen circumstances, resulting in delayed transactions. These technical issues may be factors contributing to the present situation.

Moreover, on July 5, Binance temporarily suspended withdrawals of specific Multichain derivative tokens. Binance made an announcement stating their decision to discontinue support for various altcoin projects, including Alchemy Pay (ACH) on the BNB Smart Chain, Spell Token (SPELL) on the Avalanche C-Chain, and six other projects with lower market capitalization on Ethereum and Fantom. This suspension was attributed to the network’s inability to process transactions promptly.

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