Multichain has declared an indefinite halt to its operations, marking an abrupt and dramatic cessation of one of crypto’s notable bridge services. The company attributes this to an unforeseen crisis involving its CEO, Zhaojun, resulting in a severe lack of resources and operational funds.
Zhaojun’s Detainment and Its Impact
Multichain’s CEO, Zhaojun, was taken into custody by Chinese law enforcement in late May, triggering an organizational crisis. All his electronic devices, which included his computers, phones, hardware wallets, and mnemonic phrases, were seized by the authorities. This sudden turn of events resulted in a dire situation where Multichain’s operational and investor funds, previously controlled by Zhaojun, ended up under the Chinese police’s custody.
Further escalating the problem, Multichain’s multi-party computation (MPC) node servers, akin to multi-signature wallets, were also under Zhaojun’s personal cloud server, thus blocking access for other team members. The combination of these factors led to the inability to rectify emerging technical issues and ultimately crippled the project’s operational abilities.
Role of Zhaojun’s Sister in the Unfolding Drama
Following Zhaojun’s detainment, his sister allegedly accessed the cloud server platform using information from his home computer. She granted limited access to Multichain’s team engineers, enabling them to rectify specific router-related technical issues. However, this episode took a strange twist when the network detected abnormal fund activity, with a suspicious IP address from Kunming, China, associated with large fund transfers.
Just days after these events, she reportedly transferred $220 million worth of user assets, primarily stablecoins, and ether, into newly established wallets under her control. Subsequently, Zhaojun’s sister was also detained by Chinese law enforcement, further clouding the current status of these assets.
Multichain’s Inevitable Shutdown
Left with limited access to non-MPC servers, scant sources of alternative information, and operational funds, Multichain has been forced to cease operations. This decision was also influenced by their legal obligation to cooperate with Zhaojun’s family’s demands.
These tumultuous events have not only affected the protocol’s internal operations but have also led to a dramatic fall in the value of Multichain’s native token, MULTI, which dropped by over 40%.
This complex narrative continues to draw attention from industry observers and stakeholders. The unfolding developments and mysteries surrounding Multichain’s situation highlight the potential risks and challenges facing decentralized operations in the crypto world.
