The Multichain Crash and Exploits Have a Negative Impact on the Fantom Network


Cronje realised after the fact that he should use the motto “don’t trust, verify” even in his own endeavours.

In light of Multichain’s recent issues, Fantom network co-founder Andre Cronje voiced his worry, saying that this was a major setback for the smart contract platform.

There has been a noticeable drop in activity on Fantom in recent weeks. DefiLlama data showed that between early May and July 14th, Fantom’s total value locked (TVL) dropped from around $364 million to over $70 million. The TVL of the platform peaked at $7.5 billion in 2022.

Within the same time frame, the value of Fantom’s native token, Fantom (FTM), fell from $0.41 to $0.28. Cronje expressed his displeasure in a forum topic for Fantom, claiming that the collapse of Multichain had a significant effect on him.

The Multichain team had repeatedly assured him that their servers would be distributed geographically and would be easily accessible.

After giving it some thought, Cronje concluded that the lesson to be learned here is that “don’t trust, verify” applies even to one’s own initiatives. Due to the arrest of its CEO in May, Multichain announced on July 14 that company will be shutting down.

The arrest of the CEO, who was the lone person with access to the Multichain computers, threw the firm into chaos. On July 6, the platform was exploited, adding to Multichain’s already formidable problems.

Over $125 million in cryptocurrency was stolen as a consequence of the vulnerability, which affected many wallets on the Ethereum side of the Fantom, Moonriver, and Dogechain bridges. A significant amount of the money for each bridge was drawn from this source.

It was uncovered that Multichain’s CEO had exclusive access to the “cloud server account” where all of the company’s private key fragments had been kept. Someone with unauthorised access used this cloud server account to steal money from the protocol.

The lending protocol Geist Finance also felt the effects of Multichain’s problems, and it has now ceased operations permanently because of the losses it sustained as a result of the attack.

When the attack occurred, Geist Finance’s contracts on the Fantom network had crypto assets valued at over $29 million. The loss of Geist Finance’s TVL was significant for Fantom.

Both firms have been working closely with Fantom as the latter investigates native issuance possibilities and the former reviews rollups for native bridge infrastructure.

Cronje reaffirmed their dedication to asset recovery by saying they are communicating with the appropriate groups to find a resolution.

Also Read: According to a former SEC attorney, Ripple’s crypto-party won’t last forever

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