Multichain victims search for answers in $1.5B exploit as new evidence emerges

On July 14, developers of the $1.5-billion Chinese cross-chain protocol Multichain confirmed users’ worst fears. The protocol’s CEO, identified only as “Zhaojun He,” was arrested by Chinese authorities in Kunming on May 21 after months of repeated denials on official communication channels. Also allegedly arrested was Multichain’s core team, which was operating in Shanghai. 

It was never disclosed why Zhaojun had been arrested or what the charges were. However, evidence suggests that Multichain funds may have been seized as part of an anti-money laundering operation in the context of a greater crackdown on crypto by Chinese authorities. In addition, an alleged fake ID used by the CEO to register Multichain’s operations only draws more questions. 

Victims demand answers 

Despite their previous assurance of decentralization, the Multichain team revealed that the protocol’s multi-party computation servers and private keys were all under the exclusive control of Zhaojun, which were handed over to police. Without access to such items, the protocol had to shut down, and its team members were nowhere to be found. 

By the time of disclosure on July 14, $1.5 billion in total value locked on Multichain bridge remains inaccessible. An attempt to “rescue” users’ assets earlier that month also resulted in the arrest of Zhaojun’s sister, or so the development team says. Since the arrest began, funds on Multichain have been mysteriously swapped or bridged to unidentified wallets. 

Crypto investor ArkRide, who claims to have over $9,000 stuck in the Multichain protocol, founded a victims group shortly after the incident. The group now has over 300 members. 

ArkRide tells Cointelegraph that when the group formed, the members did not even know the names of key Multichain executives. Subsequently, one member shared a document from the Singapore government’s Accounting and Corporate Regulatory Authority alleged to be a Multichain business filing. The document lists “He Xiaokun,” a resident of Jiangsu Province, China, as the “Director” of the company. After seeing this document, some allege that “Zhaojun He” is in fact a pseudonym for “He Xiaokun.” (Chinese family names are written first.)

Several Multichain victims…