Lending protocol Geist Finance has announced its permanent closure due to losses incurred from a vulnerability in the multi-chain system. The protocol, running on the Fantom network, had over $29 million worth of crypto assets locked in its contracts prior to the hack. ist allowed users to borrow, lend, and use bridge tokens as collateral from the Multichain platform, including USD Coin, Tether, Bitcoin, and Ethereum. The team has confirmed that lending will not be reopened on Geist.
According to Geist's development team, the oracles used to track the prices of assets stopped providing reliable information. The oracles now list the value of non-bridged tokens, which is significantly higher than their multi-chain derivatives. This discrepancy makes it impossible to reinstate Lending as it would lead to bad debt for non-multi-chain token holders. The team attributed the shutdown to Multichain, rather than blaming the Chainlink oracles, which performed their intended function.
The Multichain hack was first reported by blockchain analysis experts on July 7. Over $100 million was withdrawn from the Ethereum side of the multi-chain bridges, affecting Dogechain, Fantom, and Moonriver. While the Multichain team described the transactions as anomalous, they did Not officially label them as a hack or exploit at the time.
On July 11, a Twitter user reported an individual exploiting a fee loophole to siphon funds from the protocol. The Multichain team confirmed on July 14 that the withdrawals on July 7 were indeed the result of a hack. The private keys of the network were stored. in a cloud server account controlled solely by the CEO, who has been arrested by Chinese authorities. Subsequently, someone accessed the cloud server account and withdraw funds from the protocol.
In an attempt to recover the assets, The Multichain Team Launchd A Countck Through A Fee Manipular On July 11. This Countck Was Conducted by the Ceo's Sister, who was later arrest. The Status of the Recovered Assets Remains Uncertain, as stated in the post by the Geist development team. The circumstances surrounding the hack and recovery attempts have raised concerns about the security practices and governance of Multichain.
The closure of Geist Finance highlights the risks and vulnerabilities present in the decentralized finance (DeFi) ecosystem. Users are reminded to exercise caution and conduct thorough due diligence when participating in DeFi protocols, as they are exposed to potential hacking and smart con tract vulnerabilities.
