Multichain ordered to compensate Fantom Foundation $2.18M

The High Court of Singapore has ordered that the Multichain Foundation, a prominent cross-chain router protocol, compensate the Fantom Foundation, a leading layer-1 platform, with $2.18 million.

This ruling follows a devastating Multichain hack in July 2023 that resulted in the loss of over $210 million in assets across various chains.

The Multichain hack impacted numerous networks including Fantom

The incident unfolded in July 2023, when the Multichain experienced unusually large outflows, which were later confirmed to be the result of a sophisticated hack. Notably the hack came after reports of a possible Multichain rugpull causing Binance to suspend deposits.

The breach impacted numerous protocols associated with Multichain, leading to significant financial losses.

Among the affected chains were Fantom, Ethereum, BNB, Cronos, Polygon, Arbitrum, zkSync, Optimism, and Moonbeam. The financial repercussions for these networks were substantial, with the Fantom Foundation reporting considerable losses.

Fantom Foundation sought legal accountability in Singapore

In response to the hack, the Fantom Foundation sought legal recourse through the Singapore High Court, aiming to recover the losses incurred.

During a court hearing on June 3, representatives from Fantom presented comprehensive evidence to support their claim.

Notably, Multichain’s representatives were absent from the proceedings, which bolstered Fantom’s position.

The crux of Fantom’s argument centered on the assertion that the hack was facilitated by the Multichain CEO’s ultimate control over the cryptocurrency assets stored in the Multichain Bridge. This claim was reportedly admitted by Multichain on social media platform X, further strengthening Fantom’s case.

On July 8, the Singapore High Court awarded Fantom $2.18 million in damages, acknowledging the significant losses suffered during the hack.

While this compensation is substantial, it covers only a fraction of the total $210 million lost across multiple chains.

Impact of the ruling on Multichain (MULTI) and Fantom (FTM) tokens

The ruling has had little impact on the price of Fantom’s native token, FTM. Although the token has recovered from below $0.4, it is still trading 24% lower than where it was a week ago. Nevertheless, investors anticipate further gains after winning the case.

For Multichain (MULTI), the ruling has had a devastating impact resulting in a 11.40% plunge in a few hours after the ruling was made. At press time, MULTI token was trading at $0.1215.

The ruling comes amidst a broader trend of increasing cryptocurrency losses due to hacks and scams.

According to a 2024 Q2 report issued by blockchain security platform Immunefi, losses from such incidents more than doubled in the second quarter of 2024 compared to the same period in 2023.

Specifically, over $572 million was lost to hacks in Q2 2024, a significant rise from the $220 million recorded in Q2 2023. Centralized exchange hacks were the primary contributors to these losses, highlighting ongoing vulnerabilities within the industry.

This case between Multichain and Fantom underscores the critical need for robust security measures and accountability mechanisms in the rapidly evolving cryptocurrency landscape.

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