Multichain, one of the largest bridging protocols in the blockchain industry, announced it is halting operations due to a lack of funding. The news followed the arrest of the CEO’s sister by the Chinese police.
Since May, Multichain has been embroiled in lots of rumors and complaints. Users flooded its Telegram page, complaining about pending transactions. Following this, crypto exchange Binance announced it would temporarily suspend deposit and withdrawal support for some Multichain bridged tokens because of the uncertainties surrounding the protocol.
Multichain said that on May 21, the Chinese police detained CEO Zhaojun and seized his computers, phones, hardware wallets, and mnemonic phrases. Zhaojun controlled the protocol’s funds, as well as investor assets. Therefore, his arrest and confiscation of his computers limited the team’s operational ability.
On June 4, Multichain team engineers logged into Zhaojun’s computer to access the cloud server platform using the historical information provided by the CEO’s family. The team partially resumed operations, fixing technical issues with two routers.
However, user assets were abnormally transferred to an unknown address on July 7. According to Zhaojun’s sister, the cloud server platform showed a login from an IP address in Kunming, the project said.
Two days later, Zhaojun’s sister used the login information obtained on the cloud server from the IP address in Kunming to transfer customer assets worth about $220 million that were locked on multi-party computation (MPC) wallets into wallets under her control and subsequently informed the team.
Currently, Zhaojun’s sister is out of contact because she was detained by the Chinese police on July 13. As a result, Multichain said the status of the preserved assets is unclear. The team also said the lack of operational funds and the possible return date of its key personnel forced the protocol to wind down.
