Multichain, a cross-chain router protocol, has suspended its operations following an unexplained transfer of crypto assets worth millions of dollars on July 6. Stablecoin issuers Circle and Tether have subsequently frozen over $65 million in assets associated with the suspected exploit of Multichain.
According to reports, three addresses received at least $63.2 million in USD Coin (USDC) from Multichain, and these addresses are now frozen. Additionally, two addresses listed as “Multichain Suspicious Addresses” on Etherscan had over $2.5 million in Tether (USDT) frozen by Circle.
The abnormal transfer of assets affected multiple wallets and ecosystems, including Multichain’s Fantom bridge, Dogechain, Moonriver, Kava, and Conflux. However, the specific cause of the transfers remains unclear.
Suspension of Multichain Operations
Multichain took to Twitter to announce the suspension of its services without providing a timeline for their return. The company advised users not to utilize the bridging service and cautioned that all bridge transactions would be stuck on the source chains.
Michael Kong, CEO of the Fantom protocol, stated that the fund transfer does not appear to be a typical hack. Notably, the assets sent to the alleged attacker’s wallets were not further transferred elsewhere. Investigations into the incident are currently ongoing.
Challenges for Multichain and Cryptocurrency Security
Multichain, which enables token transfers between different networks, has faced technical and operational challenges since its leadership disappeared several weeks ago. Such bridges are frequently targeted by cryptocurrency hackers, and numerous incidents involving them were reported in 2022.
A recent report from SlowMist, a blockchain security firm, revealed that over $30 billion in crypto assets has been hacked in hundreds of incidents since 2012. The most common types of hacks include smart contract vulnerabilities, rug pulls, flash loan attacks, scams, and private key leaks. Crypto exchange hacks accounted for the majority of incidents, with over $10 billion lost in such breaches in the past decade.
As investigations continue into the frozen assets and the Multichain exploit, the cryptocurrency industry faces ongoing security challenges. Safeguarding digital assets and improving the robustness of bridges and interoperability solutions will be crucial to ensuring the trust and stability of the ecosystem moving forward.