Sonic Labs wins judgment for Multichain Foundation to wind up

The Singapore High Court has ordered the liquidation of Multichain, a cross-chain protocol, following a lawsuit filed by Sonic Labs (formerly Fantom Foundation). This action aims to recover funds lost in a 2023 hack that affected multiple blockchains, including Fantom, Ethereum, BNB, Cronos, and Polygon. The estimated loss across all affected chains is at least $210 million, according to a report by Beosin and Fantom.

Sonic Labs initiated legal proceedings against Multichain, citing breach of contract, fraudulent misrepresentations, and the loss of approximately $122 million of Multichain’s funds. In January 2024, the Singapore High Court granted a default judgment in favor of Sonic Labs. This legal victory paved the way for Sonic Labs to petition the court for Multichain’s liquidation, appointing KPMG as liquidators to recover and distribute the missing assets.

The decision to pursue liquidation stemmed from a lack of cooperation from Multichain’s former employees, who, according to Sonic Labs CEO Michael Kong, were “completely uncooperative” and “hid from victims.” Kong emphasized the necessity of legal action to recover funds for users. The liquidators will now work to acquire the stolen funds, with the intention of returning them to affected users, contingent upon the success of ongoing legal proceedings.

Multichain’s operational shutdown in July 2024 followed the hack and the detention of its CEO, Zhaojun, by Chinese authorities. The lack of operational funds further contributed to the company’s collapse. Sonic Labs intends to utilize the court-ordered liquidation to facilitate claims from other victims of the Multichain hack, providing a pathway for them to seek compensation for their losses. The Singapore court’s decision marks a significant development in the ongoing efforts to address the consequences of the Multichain hack and underscores the complexities of recovering assets from decentralized finance (DeFi) exploits.