- Multicoin is experiencing partial disruptions that the team claims are due to technical challenges.
- Growing concerns surrounding the bridge have prompted investors to sell off the protocol’s token MULTI.
- Multichain tweeted: ‘Some of the cross-chain routes are unavailable due to force majeure, and the time for service to resume is unknown.’
Multichain, the fourth-largest crypto bridge, is wrestling with reports of stuck trader funds and an investor sell-off of its token.
The bridge lets users transfer their crypto across eight blockchains, and holds almost $1.6 billion in investor deposits. Multichain is especially critical to DeFi on the Fantom blockchain.
The problems mounted earlier this week when users in the protocol’s Discord server complained that they were not receiving funds they had put into the bridge.
Concerns over the bridge’s stability have sparked a significant sell-off of Multichain’s governance token, MULTI.
The token sell-off began yesterday when a wallet called hwg.eth sold around $200,000 worth of MULTI and sent another $444,000 worth to centralised exchange Huobi.
DL News identified the most likely owner of the wallet as Hao Wang, managing director of VC firm Sequoia Capital China, due to several ENS domains matching his identity as well as his publicly-declared investment in Multichain. Wang did not immediately respond to a request for comment.
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Adding fuel to the fire, one of Multichain’s team wallets transferred about $3.1 million worth of MULTI to a centralised exchange, Gate.io, raising fears of a potential compromise of the bridge’s wallet.
Data from DeFiLlama shows the liquidity of MULTI on decentralised exchanges has seen a drastic plunge from $6.5 million yesterday to $700,000 today, indicating that many other MULTI holders are also selling out of the token.
MULTI liquidity on all DEXs, was 6.5m yesterday but dropped to 0.7m today pic.twitter.com/pEdnomvfZa— 0xngmi (@0xngmi) May 24, 2023
Multichain did not immediately reply to DL News’ request for comment.
A tweet from Multichain earlier in the day said: “While most of the cross-chain routes of Multichain protocol are functioning well, some of the cross-chain routes are unavailable due to force majeure, and the time for service to resume is unknown.”
Fantom DeFi at risk
Multichain is central to the functioning of Fantom, a blockchain often touted as an alternative to Ethereum. Since last year, Fantom has relied on Multichain to keep many of the assets in its $264 million ecosystem trading at the correct values.
The bridge allows users to send crypto tokens native to other chains like Ether and USDC to the Fantom network. Users deposit their tokens to Multichain and the protocol mints a Fantom-compatible tokenised version of the crypto assets for use on the network.
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Multichain has the second-highest volume of bridged assets on Fantom, DefiLlama data shows. It enabled about $110 million in cross-chain transfers on Fantom in the last 30 days.
Earlier today, a wallet address labelled as belonging to the Fantom Foundation withdrew $2.4 million of liquidity for the MULTI token from decentralised exchange Sushi on Ethereum.
Several other large holders of Multichain’s MULTI token appear to be selling their holdings or divesting their positions.
At approximately 10:00 am in London, one wallet with the address starting with 0xb4df deposited $2.75 million worth of MULTI to the centralised exchange Gate.io. Subsequently, at 11:00 am London time, another wallet associated with the Hong Kong-based venture capital firm Hashkey deposited $247,000 worth of MULTI to the same exchange.
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Dovey Wan, a founding partner of venture investment firm Primitive Ventures and a Multichain investor, tweeted about the risks of crypto work in China.
It’s not clear what she meant, or if events in China are linked to Multichain.
“It’s sad but true that in mainland China, there is ongoing action against ANY local operating crypto projects,” she said. “Chinese founders should stay hardcore [anonymous] or become Chinese diaspora if they want their projects to stay away from adversary [government] coercion.”
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MULTI is currently down over 27% in the past 24 hours, trading at $5.09 — its lowest level since January 12.