Multichain’s $130M exploit potentially an inside job: Chainalysis

Multichain’s recent troubles, including the disappearance of its CEO, suggest that the exploit may have been an inside job or a rug pull, according to Chainalysis

article-image

CryptoFX/Shutterstock, modified by Blockworks

share

Multichain, a platform that facilitates cross-chain transactions, suffered unauthorized withdrawals totaling $130 million last week, leading to the suspension of its services.

In response to the unusual outflows, the protocol advised users to revoke all contract approvals.

Describing the exploit as “one of the biggest crypto hacks on record,” Chainalysis said in a Monday report that the incident could be the result of an inside job.

Cross-chain bridge protocols like Multichain have become attractive targets for hackers due to their experimental nature and the significant amounts of assets they handle, it added.

Tokens such as wrapped ether, wrapped bitcoin (wBTC), USDC, DAI and LINK were among those affected by the suspected exploit.

It is suspected that the attacker gained control of Multichain’s multi-party computation (MPC) keys, which are responsible for executing transactions. Notably, the attacker did not swap out centrally controlled assets like USDC, which can be frozen, according to the report.

Indeed, after the attack, Circle and Tether froze specific addresses containing over $65 million in assets transferred from Multichain.

Subsequently, on-chain activity on Monday revealed that the Multichain executor address was depleting various anyToken addresses across multiple chains and transferring the assets to a new externally owned address.

Multichain hasn’t responded to multiple requests for comment. The most recent update was on July 7, stating that there was no confirmed timeline for the resumption of its services.

Loading Tweet..

Prior to the exploit, Multichain had been facing other trouble, plagued by technical issues and stuck transactions.

Multichain’s CEO Zhaojun has allegedly been missing for over a month, and other team members are believed to have been detained by Chinese authorities.

The protocol has previously indicated that the CEO is the only person with the right permissions for server maintenance.

Chainalysis noted rumors of the CEO’s arrest and the confiscation of $1.5 billion from the protocol’s smart contract funds, resulting in the suspension of services for multiple chains.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg

Research

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

article-image

The “fastest-growing ETF in history” has seen net inflows on every trading day since its Jan. 11 launch

article-image

Relm and Chainproof will provide insurance quotes to distributed validators

article-image

DLC.Link uses a Taproot-based Bitcoin multisig to let institutions mint dlcBTC, starting on Arbitrum

article-image

Pre-seed Bitcoin startup deals rose 360% in 2023, a TVP report shows

article-image

Circle’s new smart contract to allow holders of BlackRock USD Institutional Digital Liquidity Fund to redeem shares for its stablecoin

article-image

Uniswap says it was not surprised to receive a Wells notice given the SEC’s “abusive” use of power as of late