Sonic Labs Secures Court Victory in Multichain Hack Aftermath
In a significant development in the ongoing saga of the Multichain hack, Sonic Labs, previously known as the Fantom Foundation, has achieved a major legal victory. A Singapore High Court has ruled in favor of Sonic Labs‘ motion to wind up the Multichain Foundation, a crucial step in the effort to recover funds stolen during the 2023 incident. This judgment marks a pivotal moment in the quest for justice and potential restitution for victims of the hack.
A Winding Up Order to Recover Lost Funds
The May 9 ruling by Justice Kwek Mean Luck in the Singapore Supreme Court granted Sonic Labs‘ request to declare Multichain bankrupt and appoint liquidators from KPMG, a global audit, tax and advisory service. This decision grants the liquidators the power to delve into the financial affairs of the Multichain Foundation, with the ultimate goal of recovering assets and distributing them to affected users.
Sonic Labs CEO Michael Kong articulated the rationale behind the lawsuit, highlighting the lack of cooperation from former Multichain employees. In a statement on X, Kong asserted that the team behind the Sonic layer 1 blockchain felt compelled to pursue legal action due to the employees’ uncooperative stance, accusing them of hiding from victims. Kong emphasized that the appointed liquidators are now empowered to initiate the process of recovering funds, potentially returning them to users if legal proceedings are successful.
Recapping the Multichain Hack and its Fallout
The Multichain Foundation, a provider of cross-chain infrastructure, suffered a devastating hack in July 2023, leading to significant outflows of assets. The hack affected multiple chains, including Fantom, Ethereum, BNB, Cronos, and Polygon, with the estimated total losses exceeding $210 million. The incident raised serious concerns about the security of cross-chain protocols and the vulnerabilities they may present.
Prior to the wind-up order, Sonic Labs had already secured a default judgment against Multichain in January 2024. This victory, stemming from claims of breach of contract and fraudulent misrepresentation, laid the groundwork for the subsequent legal proceedings. Sonic Labs indicated that it would leverage this legal win to pave the way for other victims of the Multichain hack to file their own claims, seeking compensation for their losses.
Multichain‘s Downfall and the Implications for the Crypto Industry
Following the hack and the mounting legal challenges, Multichain shut down operations in July 2024. The closure was attributed to a lack of operational funds and the detention of Multichain‘s CEO, Zhaojun, by Chinese police. The events surrounding Multichain serve as a stark reminder of the risks inherent in the decentralized finance (DeFi) space and the importance of robust security measures.
The outcome of Sonic Labs‘ legal pursuit could have significant implications for the crypto industry. It demonstrates the potential for legal recourse in the event of hacks and other security breaches, offering a pathway for victims to seek justice and recover lost assets. It also highlights the importance of transparency and accountability in the DeFi space, underscoring the need for protocols to implement strong security measures and ensure responsible governance.
