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News/Unpacking the $126M Multichain Exploit

Unpacking the $126M Multichain Exploit

Jul 7 2023

last year2 minutes read
Multichain Exploit

Cryptocurrency Storm: The Multichain Misfortune Explained

Written by Van

There’s no mundane day in the crypto space. Every now and then, the industry faces another turbulent incident, testing its resilience. The latest storm involves Multichain, a cross-chain protocol that recently admitted the occurrence of some "abnormal" transactions involving its multi-party computation (MPC) addresses. 


The Multichain Incident: A Comprehensive Overview

Surprising many, Multichain provided an official warning, asking users to cease using its platform following an abrupt $126 million asset outflow. The vast sum was mysteriously relocated to varying wallets from its bridge deployments on Fantom and Dogechain.

The security firm, PeckShield, reported the significant asset shift, further sparking discussions and avenues for speculations in the community.

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Source: PeckShield/ Twitter

To the dismay of many users, Multichain services are currently on hold with no foreseeable resumption time. Moreover, all bridge transactions are currently frozen on their source chains, creating a dire situation for the community and projected business growth.


White Hat Hacker or a Malicious Attack?

This shocking incident elicited analytical insight from Loki Zeng, an expert on-chain analyst and a former researcher at Huobi Ventures. 

Zeng hinted that the massive asset outflows might symbolize the likelihood of an unauthorized entity gaining control of the private key shards commanding Multichain’s multi-party computation wallet

Interestingly, the crypto assets poached from Multichain were shifted to separate wallets. The provoking fact remains that no post-incident wallet activities have been noted, suggesting a possible white hat hacker intervention.


The Impact on Fantom 

The rippling effect was felt sorely by Fantom (FTM), whose token value took a significant hit. The Fantom Foundation tried to stave off further panic by clarifying that the FTM was neither issued nor managed by Multichain.

However, the veil of FUD (fear, uncertainty, and doubt) cast over the investors couldn't be lifted, resulting in a 10.3% decrease in the token value at one point. The plunge in FTM's price is allegedly connected to the crypto asset shifts from Multichain’s Fantom bridge to varied wallet addresses. 

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Previous Incidents and Raised Concerns

This is not Multichain’s first encounter with an unfortunate event. Before becoming Multichain, while still operating under the name AnySwap, the protocol had experienced a painful attack in July 2021, which resulted in the loss of over $7.9 million in assets. 

Moreover, in May 2023, users reported noteworthy delays in Multichain cross-chain fund transfers. The chronology of these unsettling incidents points towards the possible vulnerability of cross-chain transactions and the urgent need for fortified security measures within the space.


Frequently Asked Questions

1. What happened to Multichain's platform?

Multichain, a cross-chain protocol, experienced an abnormal transaction that resulted in a massive $126 million asset outflow. The assets were unexpectedly moved to various wallets from its bridge deployments on the Fantom and Dogechain networks.

2. How did the incident impact the Fantom (FTM) token?

The event spurred fear, uncertainty, and doubt (FUD) amongst investors, thereby contributing to a significant 10.3% dip in the value of the Fantom token within 24 hours.

3. Could this Multichain incident be the work of a white hat hacker?

This is a possibility, especially because each type of asset taken was transferred to separate wallets, with no subsequent activity detected. However, as of now, this is pure speculation and requires further investigation.

4. What else should we know about Multichain's past incidents?

Before rebranding to Multichain, the protocol, then known as AnySwap, suffered a loss of over $7.9 million in assets due to a malicious attack in July 2021. Additionally, users reported noticeable delays in Multichain's cross-chain fund deliveries in May 2023.

5. What is the key takeaway from this Multichain incident?

This episode has highlighted the vital importance of robust security measures in the realm of blockchain and crypto. It also underscores the potential risks associated with cross-chain transactions and the need for users to exercise caution when utilizing these services.

The incident's effects on the crypto market, notably the Fantom token, underline the intertwined dependencies within this ecosystem.


Key Takeaway and Future Outlook

The Multichain incident stands as a stark reminder of the potential perils lurking in the crypto market. The immediate repercussion was the marked 10.3% dip in the Fantom token's value. 

This event points towards the indispensable importance of sturdy security safeguards in the blockchain and cryptocurrency sector. Even though blockchain technology prides itself on its secure architecture, events like this demonstrate that there are weak links in the chain that need reinforcement.

Concurrently, users are advised to exercise utmost caution when using cross-chain transaction services. The burgeoning cryptoverse awaits Multichain's response to this incident and how it plans to win back the trust of its users, restore normalcy, and mitigate future crises. 

The operational aftermath of this incident and its influence on the overall crypto marketplace will be key to watch in the coming days.


Closing Thoughts

In the wake of the $126M Multichain exploit, it's clear that security in the world of cryptocurrency is more important than ever. While we've discussed many of the technical aspects of this exploit, it's also crucial to consider the personal security measures that individuals can take to protect their own transactions and investments. 

One such strategy involves the use of temporary phone numbers. We recommend reading our guide on using a temporary phone number for crypto transactions to learn more about how this strategy can help fortify your privacy and security in the crypto world.

This article has been refined and enhanced by ChatGPT.

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