Today, DeFi project Multichain has confirmed the arrest of its CEO Zhaojun and announced the cessation of its operations. This disclosure comes following the multi-million dollar exploit of the protocol’s bridges.
Multichain CEO And Sister Detained By Chinese Authorities
In a statement released via its Twitter account, Multichain has confirmed that its CEO Zhaojun is in Chinese custody. The project’s executive is said to have been arrested by the Chinese police on May 21, 2023.
Although rumors of the CEO’s arrest had already been making rounds, there were no official statements to back such stories. At the time, the protocol’s team only said that it had lost contact with its CEO, citing this as the primary cause of its technical issues.
Related Reading: DeFi Protocol Multichain Hacked For $126 Million, PechShield Confirms
The team has now revealed that the operational access keys to the MPC (Multi-Party Computation) node servers had been revoked following the arrest. These node servers were operating under Zhaojun’s personal cloud server account, and since the CEO was out of reach, nobody could access the MPC servers in order to resolve the issues.
According to Multichain’s statement, the team was eventually able to reach Zhaojun’s family and they found out that all of his gadgets had been confiscated by the authorities. Consequently, all of the project’s operational funds and server access are with Zhaojun and the Chinese police.
However, the team said the family managed to access Zhaojun’s cloud server platform “using the historical information on his home computer.” This allowed the project’s engineers to fix its lingering technical issues.
Multichain claims that users’ assets on MPC addresses were “abnormally” moved to unknown addresses on July 7. Two days later, Zhaojun’s sister was said to have transferred the remaining customers’ assets into wallets controlled by her and then notified the team and other project parties.
On July 13, Zhaojun’s sister was taken into custody by the police, according to Multichain’s findings. While acknowledging the uncertain status of the assets, the project tagged the action of the CEO’s sister as an “asset preservation” effort.
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Multichain Shuts Down Operations Indefinitely
At the end of the statement, Multichain announced the shutdown of its cross-chain operations. “Due to the lack of alternative sources of information and corresponding operation funds, the team is forced to cease operations,” it said.
However, the team noted that it will continue to update the community accordingly if there are new developments and further actions. It remains to be seen how the blockchains affected by the Multichain exploit would react to this news.
A week ago, Multichain was involved in a cross-chain exploit, resulting in the unauthorized movement of crypto assets from different bridges on the protocol. Fantom’s bridge was the most exposed, as the network lost more than $120 million to the attack. On Wednesday, the Fantom Foundation addressed its community, saying that it was awaiting an official statement and guidance from the cross-chain project.
