Multichain bridge woes spell end for Fantom-based DEX
SpiritSwap will shut down by Sept. 1st unless a new team takes over.
Ivan Babydov/Shutterstock, modified by Blockworks
Following a treasury drain caused by the Multichain hack, Fantom’s decentralized exchange (DEX) SpiritSwap is ceasing operations.
Multichain suspended its services in July after facing unauthorized withdrawals over $130 million. The cross-chain router protocol stated that all funds and server access were under the custody of Chinese police and CEO Zhaojun, who is allegedly detained in China.
SpiritSwap, which launched in April 2021, told users on Discord this week that due to its exposure to Multichain, it can no longer cover regular development expenses, operational salaries or marketing costs.
SpiritSwap enables token swaps on the Fantom network. Transaction fees are shared with liquidity providers and used to buy SPIRIT tokens, which are then distributed to inSPIRIT holders.
The team is currently seeking someone to take over responsibilities. But if they cannot find a successor by Sept. 1, SpiritSwap will shut down.
“Unless we can find a team, the winding down process will happen automatically, as the treasury has run out of funds to cover the necessary operational costs. SpiritSwap will remain operational until 1st of September, offering every member of our community the chance to safely remove their liquidity,” an administrator who goes by the name Nzaru said on Discord.
Nzaru noted that even if the team wanted to continue, the protocol would inevitably shut down as essential expenses like domain and GitHub fees would remain unpaid.
That stands in stark contrast to Ethereum DEX protocol Uniswap, which is immutable on-chain and will function for as long as Ethereum itself does, and cannot be shut down.
However, some users voiced concerns on Telegram, stating they couldn’t withdraw their liquidity.
Multichain CEO’s access to cloud servers allegedly restricted
A Multichain team member previously told Blockworks that the tokens affected by the sizable withdrawals lacked collateral, leaving impacted users with no immediate solution.
The member further disclosed that Zhaojun couldn’t execute the withdrawals independently, as the police control access to the cloud server account.
“His computer and password that has access to the cloud server platform are controlled by the police,” the member told Blockworks via Telegram.
The team member further indicated that they have no current plans to reimburse users for the unauthorized withdrawals.
“The users who hold assets minted by Multichain protocol on Fantom…will be affected because the assets they are holding have no collateral now,” they said.
The Multichain team hasn’t directly communicated with the Chinese officials holding Zhaojun, though their attorney is in touch. They are waiting for the investigation’s conclusion to begin legal actions and resolve the issue.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- The Drop: Apps, games, memes and more.
- Lightspeed: All things Solana.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
