Chainalysis, a blockchain security and analysis firm, suggests that the multi-million dollar exploit of the Multichain cross-chain bridge protocol may have been an internal pull. In a blog post on July 10, Chainalysis stated that the breach, which has resulted in over $125 million in damages, appears to be an insider hack or conspiracy. The firm believes compromised admin keys could be the cause, leading to suspicions of insider involvement.
Multichain's smart contracts utilize a multi-party computation (MPC) system similar to a multi-signature wallet. Chainalysis suggests that an attacker gaining control of Multichain's MPC keys could have exploited this vulnerability. While external hacking re Mains a possibility, security experts and analysts lean towards the breach being an inside job due to previous issues with Multichain.
One such issue was the disappearance of Multichain CEO "Jun Zhao" at the end of May, which exemplified internal problems within the platform. Additionally, Multichain experienced transaction delays and technical difficulties, leading Binance to cease support for several of its bridge tokens on july 7. Furthermore, recent abnormal outflows involving multi-chain executor addresses draining tokens across various chains have been reported by blockchain sleuths.
In response to the vulnerability, stablecoin issuers Circle and Tether froze over $65 million in related assets. Notably, the exploiters did not exchange centrally controlled assets like USDC, which can be frozen by the issuing company. Chainalysis highlights this as an interesting aspect of the exploit, adding to suspicions of insider involvement in the breach.
