Decentralized finance protocol, Multichain has announced the shutdown of operations after police took the founder’s sister into custody.
Multichain has been in turmoil since May after the rumors of the founder Zhaojun’s arrest circulated. Now the team has confirmed that Zhaojun was arrested on May 21.
Multichain Asks Users to Refrain From Using Services
Today, the Multichain team announced the shutdown of operations as they lack operational funds, particularly after Zhaojun’s sister was taken into police custody. The team wrote:
“Due to the lack of alternative sources of information and corresponding operational funds, the team is forced to cease operations. If there are any further notifications and developments, the team will update the community accordingly.
The Multichain team does not have access to the Domain Account to redirect or bring down the frontend https://multichain.org. Please help amplify and ask users not to use the Multichain service anymore.”
How Did Team Run Out of Operational Funds?
Multichain’s Multi-Party Computational (MPC) node servers ran under Zhaojun’s personal cloud server account. Hence, operational funds and investors’ money were under the founder’s control.
Due to his arrest on May 21, there were several stuck transactions as the team could not contact Zhaojun. As a result, Binance suspended deposits for 10 swaps on Multichain. Later Binance also ceased support for eight Multichain Bridge tokens.
Eventually, Zhaojun’s family managed to log in to cloud servers, and his sister transferred users’ assets to an externally-owned account (EoA) address. But on July 13, after the police took Zhaojun’s sister into custody, the team could not access the funds required for operations.
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Multichain suffered a $126 million exploit due to a compromise in the MPC system. Questioned were raised whether the exploit was a hack or an insider job.
The community has questioned the decentralized aspect of Multichain, as the MPC servers were controlled by a single person – Zhaojun.
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