Multichain crisis resurfaces, with over $130 million in token liquidity withdrawn.

Multichain crisis re-emerges as $130M in tokens withdrawn.

On the early morning of July 7th, Beijing time, blockchain security company PeckShield discovered that a large amount of tokens had flowed out of multiple cross-chain bridge contracts operated by Multichain.

As of press time, token liquidity worth more than $130 million has been withdrawn. Multichain’s Fantom Network, Moonriver, and Dogecoin bridging contracts have all been affected, with the Fantom bridge alone suffering a liquidity loss of more than $120 million, including 58 million USDC, 1,020 WBTC ($30.9 million), 7,200 WETH ($13.7 million), and 4 million DAI, as well as other tokens such as Chainlink, Curve DAO, YFI, Wootrade Network, and nearly a quarter of the total supply of UniDex.

Multichain is supported by multi-party computing involving 21 nodes, and the combination of these nodes requires signing transactions that authorize the flow of funds. The team has not yet made a statement on the flow of funds. The Fantom Foundation said it is aware of “what is happening on the Multichain bridge… we are actively assessing the situation and will provide the latest information as soon as we have more to share.”

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Reason speculation?

So far, these assets have not been sold or transferred to cryptocurrency mixing services, and PeckShield speculates that this may be a hacker attack caused by a security vulnerability.

Curve Finance’s official Twitter account warned, “Multichain may be under attack by hackers. Withdraw all Multichain assets if you have any.”

PeckShield also speculates whether this is related to LayerZero, a cross-chain platform, adding support for four tokens to match the tokens that were transferred, but this does not match the complete list of tokens transferred.

LayerZero CEO Bryan Pellegrino responded that the outflow of Multichain has nothing to do with the platform.

“This is a multi-chain hacker attack, which has nothing to do with LayerZero 100%,” Pellegrino said. He believes that Multichain bridge users may withdraw assets and bring them to LayerZero.

Igor Igamberdiev, research chief at Wintermute, pointed out that it is strange that the wallet that received a large amount of USDC also transacted on the old Binance Smart Chain bridge a few hours ago.

It’s unclear if this is related to Binance stopping deposits and withdrawals of Multichain cross-chain bridge tokens. Earlier, Binance announced that it would stop all deposits and withdrawals of ten Multichain bridge tokens, which bridge to Binance Smart Chain, Ethereum, Avalanche, and Fantom, including Polkastarter (POLS), Alchemy Blockingy (ACH), Beefy.Finance (BIFI), and Harvest Finance (FARM), etc. Travala (AVA) is a token minted on the Ethereum bridge and is also included. However, users can still withdraw them through other networks supported by the exchange.

Cross-chain bridge issues continue

Cross-chain bridges are a common target for cryptocurrency hackers. Multichain Bridge, formerly known as Anyswap, suffered an 8 million dollar hack in 2021. In early 2022, several hackers stole 3 million dollars from Multichain. A white hat hacker later returned 900,000 dollars of it.

This year, Multichain has experienced several technical glitches, and its potential crisis has raised concerns among investors.

In May, the Multichain project encountered difficulties processing bridge transfers, which caused a large number of transactions to become stuck. Multiple paths of the Multichain cross-chain bridge, including Kava, zkSync, and Polygon zkEVM, were unable to run. The team also confirmed that they were unable to contact CEO Zhaojun, and there were rumors in the community that Zhao was detained in China, and the team did not provide any further updates.

Ethereum co-founder Vitalik Buterin warned users not to rely on cross-chain bridges. He suggested in a blog post earlier this year that people “try to minimize dependence on bridges” and that users should “keep assets on the chains they came from.”

According to DeFi Llama, the Multichain bridge currently manages approximately $1.28 billion in assets minted through its cross-chain platform. This includes $693 million minted on Ethereum, $337 million minted on BSC, and $91 million minted on Fantom.

Blocking terminal data shows that Multichain’s native token MULTI fell 22.15% last month. At the time of writing, MULTI’s trading price is $2.84, with a 24-hour decline of nearly 10%.

Author: Blocking BitpushNews Mary Liu

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