Fantom network’s co-founder, Andre Cronje, expresses disappointment over Multichain’s recent downfall, leading to a sharp decline in activity, a drop in total value locked (TVL), and a decrease in Fantom’s native token price.
Andre Cronje, co-founder of the Fantom network, expressed disappointment over Multichain’s recent downfall, impacting the smart contract platform. Fantom’s activity sharply declined, causing its total value locked (TVL) to drop from over $364 million in May to approximately $70 million on July 14. This is a stark contrast to its peak TVL of $7.5 billion in 2022. Concurrently, the price of Fantom’s native token, also called Fantom, decreased from $0.41 to $0.28 within the same timeframe.
Cronje shared his thoughts on Fantom’s forum, referring to Multichain as a “big blow.” He revealed that he had received assurances from the Multichain team regarding server decentralization, access, and geolocation distribution. However, the recent turn of events has made him emphasize the importance of “don’t trust, verify” to himself.
The setback for Fantom can be traced back to Multichain’s announcement on July 14 that it would cease operations due to the arrest of its CEO in May. As the sole person in control of Multichain’s servers, this arrest created a leadership vacuum and exposed the platform to technical challenges. On July 6, Multichain was exploited, resulting in the withdrawal of over $125 million worth of cryptocurrencies from multiple wallets. This exploit affected the Ethereum side of Fantom, Moonriver, and Dogechain bridges, representing a significant portion of the funds held on each bridge.
It was discovered that Multichain had stored all shards of its private keys in a “cloud server account” exclusively controlled by its CEO. Unfortunately, this account was later accessed by an unauthorized party, who drained funds from the protocol. The repercussions of Multichain’s issues extended to the lending protocol Geist Finance, which had to permanently shut down due to losses incurred from the exploit. Geist Finance had locked over $29 million worth of crypto assets in contracts running on the Fantom network, further impacting Fantom’s TVL.
To mitigate the damage caused by the exploit, stablecoin issuers Circle and Tether have frozen over $65 million in assets linked to the attack. Fantom is actively engaging with both companies to explore possibilities for native issuance and reviewing rollups for native bridge infrastructure. Cronje expressed that they are considering all available options and working with relevant organizations to recover the lost assets.
The Multichain debacle has undoubtedly dealt a severe blow to the Fantom network. However, the team remains resilient and committed to addressing the challenges they face. They are determined to explore recovery avenues and collaborate with industry partners to restore confidence in the platform’s security and integrity.