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Fantom Secures Court Order Against Multichain to Recoup Lost Assets from Exploit

source-logo  cryptopotato.com 05 March 2024 16:55, UTC

The Fantom Foundation reported that the Singapore High Court instructed Multichain to compensate it. Fantom plans to seek liquidation through the court to retrieve community assets, which include around $65 million in stablecoins that are currently frozen.

Following the latest legal triumph, the platform anticipates the Singaporean court to designate a liquidator to evaluate the damages suffered due to Multichain’s security breach.

Fantom Foundation Pushes for Multichain Liquidation

Decentralized finance (DeFi) platform Fantom has obtained a default judgment against Multichain for allegedly violating their contract and making fraudulent representations.

The conflict dates back to July 2023 when the Multichain bridge was exploited, resulting in the loss of over $210 million across multiple chains, including Fantom, Ethereum, BNB, Cronos, Polygon, Arbitrum, zkSync, Optimism, and Moonbeam.

According to the later estimates, Fantom suffered losses equivalent to around one-third of the total damages. After several unsuccessful attempts to communicate with Multichain’s former directors and key personnel, Fantom initiated legal action for breach of contract and fraudulent misrepresentations regarding the losses incurred.

In an official statement, Fantom said,

“We are pleased to announce that on January 30, 2024 (effective as of November 30, 2023), the Honorable Registrar Tan Boon Heng of the General Division of the High Court of Singapore granted a default judgment ruling in Fantom’s favor.”

What’s Next?

Going forward, Fantom intends to leverage its own financial losses to request the court to initiate the dissolution of the Multichain Foundation and appoint a liquidator, akin to a Chapter 7 bankruptcy proceeding in the United States. The objective is to facilitate the recovery and equitable distribution of assets that are missing or frozen.

Fantom explained that the court-appointed liquidator will possess the necessary expertise to assist in tracing and recovering assets. They will also have distinct legal powers, including the authority to retrieve or dispose of property, recover fraudulent transactions, initiate investigations, and pursue or defend legal actions.

Additionally, the liquidator will be obligated to act in the best interests of all creditors and will have the court-mandated authority to communicate and engage with issuers, exchanges, or third parties on behalf of the Multichain Foundation.

Multichain was a cross-chain bridge protocol that experienced unauthorized withdrawals of $210 million. The team ceased operations after the company’s CEO, Zhaojun went missing before being arrested by the Chinese police.