Is Multichain guilty of a rugpull? Binance suspends deposits

The MultiChain protocol and its native token, the MULTI, have been in the limelight in today’s crypto news following reports of transactions on the Multichain protocol being delayed across multiple cross-chain bridges without a clear explanation. This has led to a huge sell-off that resulted in the MULTI price dropping by 20% at press time.

A crypto wallet linked to Fantom Foundation reportedly withdrew 449,740 MULTI tokens worth about $2.4 million from liquidity on the decentralized exchange SushiSwap. The sell-off was further fuelled by a tweet that purported that the “multichain team has been arrested by the Chinese police, with 1.5 billion dollars of contract funds under control.”

Following rumours of the @MultichainOrg team being allegedly arrested in Shanghai, some large holders of $MULTI have began moving funds.

Team wallets moving ~$3M of $MULTI to https://t.co/5ecSG3rKek have also spooked some investors, with $MULTI price falling 26.5% in 24h. pic.twitter.com/p2sQpu9Ass

— Arkham (@ArkhamIntel) May 24, 2023

Multichain cross-chain transactions were temporarily suspended

Multichain’s woes started after a self-proclaimed on-chain sleuth on Twitter, TruthLabs, highlighted how the cross-chain has amassed a total of $1.8 billion spread across different chains besides Fantom.

TruthLabs shared his permutations pointing out that he suspects a potential rugpull, which if true could cause the biggest market crisis since the Terraform Labs collapse last year.

In a move trying to explain what is happening, an admin in the Multichain Discord channel wrote:

“Most routes are working as usual, as some routes (Kava, zkSync, Polygon zkEVM) are temporarily suspended. All affected transactions will arrive after the upgrade is complete. We sincerely apologize for the inconvenience caused.”

The Singapore-based cross-chain protocol was founded in 2020 and its total value locked (TVL) has since surpassed $1.59 billion. The TVL has remained largely unaffected amid the ongoing wrangles at the protocol.

Binance suspends bridged token deposits

Although many believe the tweet about the Multichain team being arrested by Chinese police is a FUD, the Multichain team has literally gone missing further compounding the challenges facing Multichain.

As a result, the largest crypto exchange Binance has suspended deposits for 10 bridged tokens as they sought clarification from Multichain. The suspension which was announced on May 25, followed days of stuck transactions that are believed to have started the current woes surrounding Multichain.

The affected bridged tokens include Harvest Finance (FARM), Alpaca Finance (ALPACA), Polkastarter (POLS), SuperVerse (SUPER), Travala.com (AVA), Spell (SPELL), Alchemy (ACH), Fantom (FTM), Beefy (BIFI), and DeXe (DEXE).

The suspension has impacted users of bridged tokens on the BNB Smart Chain, Fantom, Avalanche, and Ethereum blockchain networks.