Multichain Protocol Hit by $126 Million Hack, Adds to Growing Crypto Security Concerns

Cross-chain bridge Multichain experiences “abnormal” transfer of $126 million.

In yet another blow to the troubled bridging project, Multichain, co-founder Dj Qian confirmed that the protocol has fallen victim to a significant hack, resulting in the loss of approximately $126 million worth of crypto assets. The incident adds to the growing concerns surrounding the security of cross-chain bridges within the cryptocurrency ecosystem.

Stolen tokens traced to unknown addresses; affected chains include Fantom, Ethereum, Avalanche, and Binance Smart Chain

Blockchain security firm PeckShield managed to track the stolen tokens, which included popular cryptocurrencies such as Wrapped Bitcoin (WBTC), Chainlink (LINK), and stablecoins like Circle’s USDC, Tether’s USDT, and Dai (DAI). These assets were swiftly moved to six new Ethereum addresses. Among the affected chains, Fantom saw the most significant withdrawals, totaling $118 million, followed by Ethereum, Avalanche, and Binance Smart Chain.

Multichain’s ongoing challenges and previous incidents

Multichain has been grappling with various issues since late May, when users reported long transaction delays. Rumors also circulated regarding the arrest of Multichain CEO Zhaojun in China, and the team’s inability to contact him, as he holds the private key to the pools affected by the stuck transactions. Binance, a major cryptocurrency exchange, had already suspended certain Multichain token deposits and halted withdrawals on July 5.

Heightened risks associated with cross-chain bridges and DeFi protocols

The recent exploit once again sheds light on the vulnerability of cross-chain bridges, which have become attractive targets for hackers. According to DeFiLlama data, out of the total $5.44 billion hacked from decentralized finance (DeFi) protocols to date, bridges account for a significant 48%, equivalent to $2.66 billion. This alarming trend underscores the urgent need for enhanced security measures within the crypto industry.

Impact on Multichain and the broader crypto market

Following the news of the hack, Multichain’s governance token, MULTI, experienced a 14% decrease in value within a 24-hour period, according to CoinGecko. The protocol’s reputation has been further marred by ongoing discussions and concerns surrounding its cross-chain routes.

In a separate incident, Euler Finance, another major Defi platform in the cryptocurrency space, experienced a significant hack in the month of March, 2023, with $197 million stolen through a flashloan exploit. Later, the hacker behind the large-scale asset drain had returned all the “recoverable funds.

The Euler Finance hack further highlights the ongoing security concerns within the crypto industry.

As the investigation into the Multichain hack continues, the incident serves as a stark reminder of the critical importance of robust security measures in safeguarding digital assets within the rapidly evolving cryptocurrency landscape.

Also read: Crypto hack timeline till 2023

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