14 Jul, 2023

Multichain Shuts Down, CEO and Sister Detained Holding $220M

Multichain CEO

TL;DR

Multichain, a blockchain project, has revealed that its CEO and his sister have been detained in China. The CEO’s sister reportedly moved $220 million in funds following unusual activity before her arrest. Consequently, the project is suspending operations.

Multichain CEO Zhaojun Arrested

Surprisingly, the cross-chain project Multichain confirmed rumors that its CEO, Zhaojun, has been arrested by Chinese authorities. Along with Zhaojun’s detention, his electronic devices, including computers, phones, hardware wallets, and mnemonic phrases, were seized by the police.

Safeguarded by multi-party computation, the project faced severe technical problems. Zhaojun’s personal cloud server account oversaw the servers inaccessible to the team. This resulted in revoked access for those who would typically endorse such transactions, leading to the initial inability to rectify technical issues.

In a significant blow, Multichain revealed that all operational and investor funds, previously controlled by Zhaojun, are now in the hands of the Chinese police. The unfolding situation places the project’s future in a precarious state.

multichain token
Multichain token.

Abnormal Activity

On June 4, engineers at Multichain, a leading blockchain project, successfully rectified the platform’s technical difficulties. This achievement was realized by gaining necessary access through historical data on the home computer of the project’s CEO, Zhaojun.

However, further turmoil ensued on July 7 as abnormal fund activity was detected within the network. As the project and Zhaojun’s sister reported, the cloud server platform indicated an unusual login from an IP address in Kunming, China. Mere days after this event, she reportedly shifted $220 million worth of user assets. These were mainly stablecoins and ether, into newly established wallets under her personal control.

The unfolding drama escalated further on July 13. This is when the sister of the beleaguered CEO was detained by Chinese law enforcement, according to Multichain’s project team. However, the current status of the aforementioned assets remains uncertain.

In a statement, the project announced its inability to continue operations. This was due to the scarcity of alternative information sources and a critical lack of operational funds. “The team is forced to cease operations,” it stated.

Interestingly, Multichain refrained from making public that Zhaojun had been detained for several weeks, citing local laws and regulations. Initially, it had merely alluded to a force majeure event and reported losing contact with the CEO.

This ongoing situation, replete with intriguing developments and mysteries, will continue to draw attention from stakeholders and industry observers. Further updates will be provided as more information becomes available.