Fantom co-founder Andre Cronje categorized the Multichain disaster as a “major blow” to the smart contract platform, which has seen a sharp drop in activity in the past weeks as a result of the Multichain issues.
according According to data from DefiLlama, the total value of closed Fantom (TVL) fell from more than $364 million in early May to about $70 million on July 14. At its peak in 2022, Fantom’s TVL is over $7.5 billion. Fantom (FTM) native coin price dropped From $0.41 to $0.28 over the same period.
“Multichain was a big hit, Crone books in Fantom’s forum thread, adding that he “got a lot of assurances from the (Multichain) team about server decentralization, access, and geolocation distribution. Don’t trust, verify (tell it myself).”
Cronje’s comments come on the heels of Multichain’s July 14 announcement that it is shutting down operations following the arrest in May of its CEO, who is the sole person in control of Multichain’s servers.
With its leadership suspended and technical challenges mounting, the Multichain exploit took place on July 6, siphoning more than $125 million in cryptocurrency from multiple wallets, affecting the Ethereum side of the Fantom, Moonriver and Dogechain bridges. These withdrawals accounted for the majority of the funds held on each bridge.
Cointelegraph reported that Multichain was storing all parts of its private keys in a “cloud server account” under the sole control of its CEO. This cloud server account was later used by someone to drain money from the protocol.
The multiplier of Multichain’s problems also affected lending protocol Geist Finance, which was forced to shut down permanently due to losses from exploitation. Prior to the hack, more than $29 million in crypto assets were locked into contracts running on the Fantom Network. As such, the closing of Geist had a huge impact on Fantom’s TVL.
In response to the exploit, stablecoin issuers Circle and Tether froze more than $65 million in assets linked to the attack. Fantom is said to be working with both companies for local release and revision kits of the original bridge infrastructure. “We are exploring all options at this point, and are working with the relevant organizations to try to recover the assets,” Cronje noted.
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