Crypto Community Shaken Amid Multichain’s Founder Arrest in China

Crypto Community Shaken Amid Multichain’s Founder Arrest in China

• Founder of Multichain arrested in China, sparking concerns over $1.6B in funds.
• Speculation suggests that Chinese police may control the network’s hardware and cold wallet.
• Transaction delays and criticism led to a sharp price drop for Multichain’s token.

In a stunning turn of events, the founder of Multichain, a prominent blockchain network, has been taken into custody by Chinese authorities for investigation. This development comes as a surprise to many, especially those who have been praising China’s new crypto policies.

Speculation surrounding the arrest suggests that the Chinese police may now have control over the network’s hardware and cold wallet, potentially involving $1.6 billion in funds.

According to the rumors earlier today in Chinese community, it is said that the core members of the Multichain team were arrested by Chinese police, and the cold wallet was controlled, involving about $1.5 billion in funds.#MultiChain

— Gwei Research(fomerly 8BTCnews) (@btcinchina) May 25, 2023

Rumors circulated that the entire development team behind the Multichain network had been apprehended, causing further distress. However, the project’s co-founder, Alfred Xu, reassured the community in a Telegram message, stating that the team remains intact and that business operations are continuing as usual. Xu expressed confidence in the network’s ability to restore its troubled route autonomously.

The timing of this incident raises eyebrows, as Multichain had recently experienced minor transaction delays, with customers waiting over 24 hours to withdraw funds. The team attributed these delays to upgrades being made to their bridge router. Nonetheless, these setbacks were met with strong criticism from the community, leading to a sharp drop in the price of Multichain’s token, MULTI, within 24 hours.

As fears of a potential crisis mounted, attention turned to other projects with significant exposure to Multichain. Reports indicate that Fantom, a popular blockchain platform, holds the highest exposure, with approximately 35% of its Total Value Locked (TVL) relying on Multichain.

Moreover, a significant portion of Fantom’s assets is issued through the Multichain bridge, further highlighting the interconnectedness of these networks.

After the rumors involving the Multichain team being arrested, we decided to take a look at the protocols with the highest exposure to it.In first place comes Fantom, with 35% of its total TVL locked in it and a significant portion of the chain's assets issued by the bridge. pic.twitter.com/ZTp6TH1bod

— An Ape's Prologue (@apes_prologue) May 24, 2023

While the situation remains fluid and speculative, the arrest of Multichain’s founder has sent shockwaves throughout the crypto space. As the investigation unfolds, the fate of the seized funds and the impact on Multichain and its affiliated projects hangs in the balance, leaving investors and enthusiasts anxiously awaiting further developments.

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