A recent revelation has raised concerns about the decentralized web and the control of funds in blockchain technology. Multichain, a Chinese decentralized cross-chain bridge protocol, announced its cessation of operations after allegations emerged that its co-founder and CEO, Zhao Jun, held sole control over more than $1.5 billion in users’ cryptocurrency stored on Multichain. Both Zhao Jun and his sister, whose name remains unknown, were reportedly arrested by Chinese police, leaving many unanswered questions.
The controversy surrounding Multichain started when users reported delayed fund transfers, with administrators attributing the delay to backend node upgrades. Meanwhile, rumors circulated about Zhao Jun’s arrest, prompting fellow co-founder Alfred Xu to dismiss them as misinformation. Despite assurances from various team members, concerns escalated when PANewsLab reported that Zhao Jun was unreachable. Another co-founder, DJ Qian, confirmed Zhao Jun’s disappearance but assured users that their assets and staff were safe.
In July, unauthorized withdrawals totaling over $100 million were noticed on Multichain’s Fantom Ethereum bridge, along with funds from other sidechains. This led to fears of a possible hack, and suspicions arose that the incident may have been an inside job. Multichain developers discovered abnormal transfers of user assets and revealed that Zhao Jun’s sister had performed an “asset preservation action” by transferring the remaining assets from a router pool to addresses under her control. However, she was subsequently arrested, further complicating the situation.
The lack of transparency surrounding Zhao Jun’s arrest and the details of his case raises concerns for Multichain’s users. Under Chinese law, seized funds associated with criminal investigations can be considered proceeds of crime, potentially leading to state seizure. This situation highlights the risks of entrusting complete control over key infrastructure and access to a single individual or a small group.
The Multichain saga serves as a reminder of the importance of security, accountability, and decentralization in blockchain technology. It emphasizes the need for robust governance mechanisms and safeguards against concentration of power. Users should exercise caution when relying on platforms that centralize control, as such vulnerabilities can have severe consequences for their assets.
In other news, cryptocurrency exchange Binance has faced its share of challenges. On its sixth anniversary, Binance announced layoffs affecting up to 1,000 employees. The reductions primarily targeted the customer service sector amid ongoing reorganization efforts and regulatory scrutiny. Binance is currently under investigation by the U.S. Department of Justice for alleged unregistered securities offerings and operating an unregistered exchange.
As Binance faces legal battles and ongoing regulatory pressure, it took additional cost-cutting measures by ceasing employee reimbursements for various expenses. Despite these setbacks, Binance’s CEO, Changpeng Zhao (CZ), stated that the exchange is still hiring, emphasizing their commitment to talent density.
These recent developments highlight the ever-evolving landscape of the decentralized web and the challenges faced by blockchain projects and cryptocurrency exchanges. Regulatory compliance, transparency, and user protection remain critical areas that the industry must address to foster trust and sustainable growth.