The Fantom Foundation has taken legal action by petitioning the Singapore High Court to declare the Multichain Foundation bankrupt, citing potential avenues for the recovery of $122 million stolen from Multichain's Fantom Bridge last year. According to a blog post released by Fantom on March 4, legal proceedings were initiated against cross-chain protocol Multichain by the Singapore High Court on January 30. The proceedings were based on allegations of breach of contract and fraudulent misrepresentation, leading to a default judgment as per Fantom's claims. Multichain's utilization of its 1 million capital in July 2023 was noted in the legal proceedings.
In response to the recent ruling, Fantom Foundation plans to leverage its own financial losses to petition the court for the liquidation of the Multichain Foundation and the appointment of a liquidator, akin to Chapter 7 bankruptcy. This move aims to aid in the recovery and distribution of lost or frozen assets, as stated in the March 4 blog post. The court will assess the damages incurred by Fantom and seek compensation from Multichain. In the event that Multichain fails to make the required payments, Fantom intends to request the appointment of a liquidator.
Should the petition be approved, the liquidator would gain authority over Multichain Foundation's assets, enabling actions such as asset repossession, transaction reversal, and asset recovery to reimburse owed creditors. While Fantom clarified that the court's ruling solely pertains to its own losses, it expressed intentions to utilize this legal victory as a precedent for all affected users to pursue claims against Multichain. The Fantom Foundation committed to pursuing the matter until a liquidator is appointed in the upcoming months.
Multichain Foundation has not yet responded to requests for comment regarding the court decision. Beosin and Fantom, blockchain security firms, jointly assessed the total breach cost incurred by Multichain at $210 million. Multichain, a protocol facilitating fund transfers across multiple blockchains like Fantom, Ethereum, and Polygon, experienced unauthorized withdrawals in July last year. Speculation by blockchain analytics firm Chainalysis suggested a potential insider involvement due to the theft of administrator keys. Fantom has been actively seeking avenues for asset recovery since the breach, including filing reports with the Singapore and Chinese authorities, where Multichain Foundation is registered, and initiating legal action against the company. Additionally, co-founder He Zhaojun, associated with Multichain, was reportedly arrested on unspecified charges in May 2023, preceding the attack, although his current status remains unconfirmed despite recent activity on his Telegram account in January.
