TLDR
- The Singapore High Court has ordered Multichain Foundation to pay $2.18 million in compensation to the Fantom Foundation for losses incurred in a 2023 hack.
- The hack resulted in over $210 million worth of cryptocurrency assets lost from multiple chains.
- Fantom secured a default judgment against Multichain on Jan. 30, 2024, and has been pushing for Multichain’s liquidation to recover lost funds.
- The court found that Multichain’s CEO, Zhaojun He, had complete control over the assets, contrary to claims of decentralization.
The High Court of Singapore has ordered the Multichain Foundation to pay $2.18 million in compensation to the Fantom Foundation for losses incurred during a major cryptocurrency hack in July 2023.
This decision, made by Judicial Commissioner Mohamed Faizal, marks a significant development in the ongoing saga of one of the largest crypto exploits in recent years.
The hack, which occurred on July 6, 2023, resulted in the loss of over $210 million worth of cryptocurrency assets from multiple chains, including Ethereum, BNB, Cronos, Polygon, Arbitrum, zkSync, Optimism, and Moonbeam.
The Fantom Foundation, which operates the Fantom blockchain, was among the victims of this large-scale exploit.
Following the incident, Fantom took legal action against Multichain, securing a default judgment on January 30, 2024. Since then, the Foundation has been actively pursuing the liquidation of Multichain Foundation to recover its lost funds. The recent court ruling is a crucial step in this direction.
Fantom Foundation Update on Judgment Against Multichain.
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— Fantom Foundation (@FantomFDN) July 8, 2024
During a June 3 hearing, Fantom presented evidence supporting its claims. A key argument was that the losses were due to Multichain’s CEO, Zhaojun He, having complete control “over the cryptocurrency assets stored in the Multichain Bridge.” This revelation contradicted Multichain’s previous claims of decentralization, a principle that many users relied upon when using the platform.
The court found that Multichain had essentially admitted to this centralized control in public statements made on social media platform X (formerly Twitter).
This admission violated what Fantom contended was a key term in the User Agreement, which stated that the Multichain Bridge was controlled by decentralized, safe, and secure multi-party computation nodes incapable of one-person control.
The compensation awarded is less than what Fantom had initially claimed to have lost. Despite this, the Foundation views this ruling as a significant victory, not just for itself, but for all parties affected by the Multichain exploit.
In a statement following the ruling, the Fantom Foundation said,
“Although this judgement only relates to Fantom’s own losses, the purpose of the Foundation’s litigation was to bring about the winding up of Multichain and the appointment by the Court of a third-party liquidator — which Fantom Foundation will partially fund — to help recover and distribute missing or frozen assets for all parties affected by the Multichain exploit.”
The Foundation plans to continue its legal efforts “until a liquidator is appointed,” which they anticipate will occur in the coming months. Once appointed, the liquidator will conduct an independent assessment of assets, followed by claims, recovery, and distribution processes.
