The turbulence surrounding Multichain (MULTI), a popular cross-chain protocol, hit a new peak as the team recently reported their inability to contact CEO Zhaojun, the sole possessor of critical server access permissions.
This sudden halt in operations coincides with unverified rumors of police arrests and substantial confiscation of funds.
Server access crisis paralyzes operations
Multichain’s team took to Twitter, explaining the trials they’ve been grappling with, which have manifested in multifaceted issues plaguing their protocol. Among these, a standout problem lies with the scanning node network of Router5.
This complication has disrupted the standard cross-chain service of several chains, with the team’s hands being tied due to their lack of access permissions. As a stop-gap measure to safeguard user interests, Multichain suspended the affected cross-chain services on their user interface.
These disruptions have affected an array of chains, with Kekchain, PublicMint, Dyno Chain, Red Light Chain, Dexit, Ekta, HPB, ONUS, Omax, Findora, and Planq taking the hit.
In a bid to mitigate further damage, Multichain has requested partners to cease invoking the smart contracts of the affected chains for cross-chain operations.
Murky waters ahead
As this server access fiasco unfolded, unverified rumors began to circulate on Twitter, hinting at possible legal trouble.
According to these speculations, the Chinese authorities have apprehended the Multichain team, with an astonishing $1.5 billion worth of smart contract funds reportedly confiscated.
Attempts to verify these rumors with the beleaguered Multichain team have been unsuccessful as of this report’s writing. The crypto community’s reaction to Multichain’s current predicament has been mixed, with some expressing their disappointment in what they view as a “backward step” from decentralization.
The inability to access servers and solve the problem has highlighted potential fragilities within the project’s structure. Changpeng Zhao, the CEO of Binance, also chimed in with a seemingly nonchalant tweet in response to Multichain’s announcement, saying “Stay SAFU.”
Knock-on effects on associated chains and tokens
As the dust begins to settle around the initial shock, significant consequences for associated chains and tokens have become evident.
In response to the lack of clarity around these issues, Binance proactively suspended deposits for ten bridged tokens on the BNB Smart Chain, Fantom, Ethereum, and Avalanche blockchain networks on May 25.
Concurrent with these actions, the Fantom Foundation extracted 449,740 MULTI, equivalent to $2.4 million, from liquidity on the decentralized exchange, SushiSwap.
Additionally, Lookonchain, a renowned blockchain analytics firm, reported smart money accounts causing $3 million worth of MULTI outflows last week.
With the Multichain team’s communication channels remaining unresponsive, the uncertainty surrounding this situation continues to mount. It is hoped that the dust will soon clear, providing some much-needed answers and a clearer path forward.
As always, investors and users are encouraged to stay vigilant and make informed decisions amidst these uncertain times.
