On July 6, Multichain, a platform enabling cross-chain transactions, experienced unauthorized withdrawals amounting to $130 million, resulting in the suspension of its services. In response to the unexpected outflows, the protocol advised users to revoke all contract approvals. Chainalysis, referring to the incident as “one of the biggest crypto hacks on record,” suggested in a recent report that the exploit might have been an inside job.
According to Chainalysis, cross-chain bridge protocols like Multichain have become attractive targets for hackers due to their experimental nature and the substantial value of assets involved. Tokens such as wrapped ether, wrapped bitcoin (wBTC), USDC, DAI, and LINK were among those affected by the suspected exploit.
The attack is believed to have been executed by gaining control of Multichain’s multi-party computation (MPC) keys, responsible for executing transactions. Notably, the attacker refrained from swapping centrally controlled assets like USDC, which can be frozen.
In response, Circle and Tether froze specific addresses holding over $65 million in assets transferred from Multichain. On Monday, on-chain activity revealed that the Multichain executor address was depleting various anyToken addresses across multiple chains and transferring the assets to a newly owned external address.
Despite multiple requests for comment, Multichain has not responded. The latest update on July 7 mentioned no confirmed timeline for the resumption of services. Prior to the exploit, Multichain had been dealing with technical issues and stuck transactions.
Reports suggest that Multichain’s CEO Zhaojun has been missing for over a month, while other team members are believed to have been detained by Chinese authorities. The protocol had previously indicated that the CEO alone possessed the necessary permissions for server maintenance.
Chainalysis also mentioned rumors of the CEO’s arrest and the alleged confiscation of $1.5 billion from the protocol’s smart contract funds, leading to the suspension of services across multiple chains.
The situation surrounding Multichain remains uncertain, with significant losses incurred by users. The incident highlights the risks associated with experimental protocols in the crypto space, emphasizing the need for robust security measures and heightened vigilance.
