The cross-chain protocol Multichain, which halted operations in July, restarted in early November, allowing one of its users to profit from arbitrage of $1 million. DL News reports.
The July shutdown, the team explained, was due to the arrest by Chinese authorities of CEO Zhao Jun, which led to a loss of access to the wallet. The project’s problems began as early as May, and user funds were subsequently began to be transferred to unknown addresses.
On 1 November the protocol briefly resumed processing transactions on the Fantom blockchain. At around 9:40 UTC an unknown individual successfully withdrew WBTC worth about $1 million to the Ethereum network. It was the first operation through Multichain in 117 days.
Subsequently the user made transfers in WETH and USDT. Finding that the bridge was functioning, dozens of other traders began using it with small amounts.
After about two hours of activity, Multichain stopped again.
Experts say the timing of the unknown’s operations raises questions about his actions in concert with those who restarted the protocol.
At 9:23 UTC, this user received 1.2 million Fantom (FTM) tokens from Binance worth about $280,000.
Then he swapped 500,000 FTM for “wrapped” Bitcoin via the DEX Spookyswap on the Fantom blockchain. After the restart, the assets were immediately transferred to Ethereum.
The same method was used by the unknown actor for swaps of FTM to WETH and USDT, but with withdrawals to the BNB Chain.
About ten minutes after his last transaction, the bridge stopped working again.
Experts note that the user effectively capitalised on price discrepancies. For example, WETH before Multichain’s restart traded on Fantom at around $7,000 — about 80% below current spot quotes. WETH and USDT were in similar positions. Starting with $280,000, he finished with assets worth over $1 million, which he sent back to Binance.
Cyvers Alerts specialists noted that after the protocol suspended operations a queue of pending transactions remained. It is presumed the arbitrager’s transactions were given priority because the earlier ones stayed in the queue.
Just to clarify, we didn’t claim that the stuck transactions have been processed, but rather we were referring to transactions from the last day!
— ? Cyvers Alerts ? (@CyversAlerts) November 2, 2023
Commentators also noted the lack of any notification about the Multichain restart. The last post on the project’s previously active X account was dated October 6.
DL News researchers noted that, according to BlockSec CEO Yajin Zhou, the allegedly arrested head of Multichain is the only one who could have restarted the bridge.
According to DeFi Llama, the protocol still stores user deposits totaling about $120 million.
In October, losses from hacks and fraud in the crypto industry fell to $51.61 million — 85% below the level a month earlier, according to Beosin.