Fantom network’s co-founder, Andre Cronje, expressed his concern over Multichain’s recent troubles, stating that it dealt a significant blow to the smart contract platform.
In recent weeks, Fantom has witnessed a sharp decline in activity. Data from DefiLlama revealed that Fantom’s total value locked (TVL) plummeted from over $364 million in early May to approximately $70 million on July 14. In 2022, the platform’s TVL reached its peak at $7.5 billion.
Additionally, the price of Fantom’s native token, Fantom (FTM), decreased from $0.41 to $0.28 within the same period.
Cronje conveyed his disappointment in a thread on Fantom’s forum, stating that Multichain’s failure had a profound impact.
He had received numerous assurances from the Multichain team regarding server decentralization, access, and geolocation distribution.
Reflecting on the situation, Cronje emphasized the need to “don’t trust, verify” even within his own projects.
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Multichain made an announcement on July 14, revealing that it would be ceasing operations due to the arrest of its CEO in May.
As the sole controller of Multichain’s servers, the CEO’s arrest left the company in disarray.
Compounding the challenges faced by Multichain, the platform fell victim to an exploit on July 6.
The exploit resulted in the withdrawal of over $125 million worth of cryptocurrencies from multiple wallets, impacting the Ethereum side of Fantom, Moonriver, and Dogechain bridges.
These withdrawals accounted for a significant portion of the funds held on each bridge.
It was discovered that Multichain had stored all shards of its private keys in a “cloud server account” controlled solely by its CEO.
This cloud server account was subsequently utilized by an unauthorized individual to drain funds from the protocol.
The repercussions of Multichain’s issues also extended to the lending protocol Geist Finance, which was forced to permanently shut down due to losses incurred from the exploit.
Prior to the hack, Geist Finance had over $29 million worth of crypto assets locked in contracts on the Fantom network. The closure of Geist Finance had a profound impact on Fantom’s TVL.
In response to the exploit, stablecoin issuers Circle and Tether have frozen more than $65 million in assets associated with the attack.
Fantom is actively collaborating with both companies to explore options for native issuance and reviewing rollups for native bridge infrastructure.
Cronje affirmed their commitment to recover assets, stating that they are engaging with relevant organizations in pursuit of a solution.
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