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Multichain ceases operations after CEO’s sister’s arrest holding $220 million

Multichain ceases operations after CEO's sister's arrest by Chinese police

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TL;DR

  • Multichain has ceased its operation due to the lack of alternative information sources and corresponding operational funds
  • With the CEO’s sister now arrested, the status of the assets she maintained is uncertain

Multichain, a bridging protocol, has confirmed that it has ceased operations as CEO Zhaojun’s sister was arrested recently by the Chinese police while holding $220 million of the protocol’s funds. In a thread on its Twitter page, Multichain explained that it would be ceasing its operation due to the lack of alternative information sources and corresponding operational funds. 

Multichain CEO’s sister held $220 million

Multichain’s problems started in late spring after users took it to their Telegram complaining that the platform had some of their pending transfers. There were also rumors that Chinese authorities had arrested multiple Multichain executives. 

In its latest thread, the project has confirmed that the Chinese police arrested the CEO on May 21, and his sister was arrested later on Thursday. According to the project, his laptops, phones, hardware wallets, and the Chinese police took hold of the mnemonic phrases. Although the project is secure through multi-party computation, Zhaojun personally controlled the servers performing this. Since individuals who would typically sign such transactions had their access denied after his arrest, the project was originally unable to address its technological problems.

The project also said that Zhaojun had control of all operational and investor funds. Zhaojun’s family used his home computer’s history data on June 4 to access the cloud server. They gave Multichain team engineers direct access to the desktop to address two routers’ technical problems. The next day, Multichain largely resumed business as usual.

Zhaojun’s sister also gained access to client assets restricted on multi-party computation (MPC) wallets a month later using login credentials she received on the cloud server from a Kunming IP address. She then moved the assets into wallets under her control and informed the team. However, since her arrest, the status of the assets she kept is unknown because she is no longer communicating with them, according to the protocol.

Multichain’s hack last week

Last week, as an attacker siphoned money from various token bridges, the system was attacked and lost $130 million, highlighting its vulnerable state.

According to Zhaojun’s sister, she discovered a series of transactions moving money from the MPC addresses and login details from a Kunming IP address on the cloud server platform, Multichain stated in the Twitter thread.

Multichain also clarified that it withheld Zhaojun’s news on detention during the last few weeks owing to local rules and regulations. It initially claimed a case of force majeure and later claimed it had lost touch with the CEO.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Yvonne Kiambi

Yvonne is a blockchain and crypto enthusiast. She is passionate about writing and looks to effortlessly guide readers through the exciting world of crypto. You'll find her immersed in a good book when she's not writing.

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