The Fantom Foundation wants the Singapore High Court to declare the Multichain Foundation bankrupt, which it says could open an avenue for it to recover the $122 million that was stolen from Multichain’s Fantom bridge last year.
In a March 4 blog post, Fantom said the High Court of Singapore granted it a default judgment ruling on Jan. 30 in its legal action against the cross-chain protocol Multichain for “breach of contract and fraudulent misrepresentations” after Fantom claimed Multichain lost $122 million of its funds in July 2023 to an exploit.
“Given the recent ruling, we will use the Fantom Foundation’s own financial losses to petition the court to wind up the Multichain Foundation and appoint a liquidator (equivalent to a Chapter 7 bankruptcy in the U.S.) to help recover and distribute missing or frozen assets,” it said.
The court will assess the damages owed to Fantom and demand repayment from Multichain. Fantom said in a March 4 X post it’s not expecting Multichain to pay up at which point it will ask for a liquidator.
If approved, the liquidator would — among other powers — have the authority to take over the Multichain Foundation’s assets, claw back transactions and recover other assets with the aim of paying back creditors it allegedly owes.
Since the July 2023 Multichain exploit, Fantom Foundation’s management and legal team have been working tirelessly across multiple jurisdictions to chart a path forward that enables victims to partially recover assets lost. We have an important update in this regard.
— Fantom Foundation (@FantomFDN) March 4, 2024
After all… pic.twitter.com/pUxyalPdMD
Fantom said the court’s judgment relates only to its own losses, but it “plans to use this legal victory to pave a path for all users to lodge their claims against Multichain.”
“Over the next few months, we will progress the matter until a liquidator is appointed,” it pledged.
Multichain did not immediately respond to a request for comment on the court judgment.
Blockchain security firm Beosin and Fantom pinned Multichain’s total exploit losses at $210 million. The protocol helped users bridge funds to multiple blockchains, including Fantom, Ethereum and Polygon and had a series of unauthorized withdrawals in July last year.
At the time, blockchain analytics firm Chainalysis speculated the heist could have been due to compromised administrator keys and implied it could be an “inside job.”
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Fantom said since the exploit, it’s worked to find a way to recover the lost assets, which included filing a report with Singapore police, where the Multichain Foundation is incorporated and commencing its legal action against the company.
It also filed a police report in China where it said Multichain and its co-founder Zhaojun He is “subject to an active investigation.”
He was arrested on unexplained charges two months before the exploit in May 2023. His Telegram account was found to be active in January, but it’s not confirmed if it was him.
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