The Fantom Foundation has taken significant strides in its legal dispute against the Multichain Foundation after a breach of contract and alleged fraudulent misrepresentations resulted in a $122 million loss in July 2023. In a recent development, the High Court of Singapore granted Fantom a default judgment ruling on January 30 in its favor. This ruling sets the stage for Fantom to pursue further legal action to recoup its losses and potentially seek Multichain’s bankruptcy declaration.
Fantom’s legal proceedings against Multichain were rooted in claims of breach of contract and fraudulent misrepresentations, which caused the $122 million loss. With the recent default judgment by the High Court of Singapore, Fantom aims to leverage this victory to petition the court for Multichain Foundation’s bankruptcy. This process would involve appointing a liquidator to aid in recovering and distributing missing or frozen assets, similar to Chapter 7 bankruptcy proceedings in the U.S.
Fantom’s Recovery Efforts in Progress
Fantom intends to use the court’s judgment to reclaim its losses and pave a way for all affected users to file their claims against Multichain. The court will assess damages owed to Fantom, and if Multichain fails to meet repayment demands, Fantom will seek the appointment of a liquidator. This liquidator would assume control of Multichain Foundation’s assets, recover missing assets, and reimburse creditors.
Multichain’s Response and Ongoing Investigations
Multichain Foundation has yet to respond to requests for comment regarding the court judgment. The blockchain security firm Beosin and Fantom estimated the total losses from the breach at $210 million. The breach, which occurred in July of last year, involved unauthorized withdrawals from Multichain’s protocol, enabling fund bridging across various blockchains, including Fantom, Ethereum, and Polygon.
Chainalysis, a blockchain analytics firm, speculated at the time that compromised administrator keys might have facilitated the breach, hinting at a potential “inside job.” Alongside legal actions, Fantom has been actively engaged in other initiatives to recover the lost assets, including filing a report with the Singapore police and initiating legal proceedings against Multichain.
Additionally, Fantom lodged a police report in China, where Multichain Foundation is registered, and its co-founder Zhaojun He reportedly faces an active investigation. He was apprehended on undisclosed charges two months before the breach in May 2023. Although his Telegram account was active in January, his involvement in the ongoing situation remains unconfirmed.
