Default Judgment Awarded to Fantom
Fantom revealed in a blog post on March 4th that the High Court of Singapore awarded it a default judgment in its lawsuit against the cross-chain protocol Multichain. Fantom alleged that it lost $122 million of its funds due to an exploit in July 2023 involving Multichain.
“Following the Multichain exploit in July 2023, the Fantom Foundation’s management and legal team have diligently worked across various jurisdictions to devise a strategy that allows victims to recoup a portion of their lost assets. We have a significant update to share. We are delighted to report that on January 30th, 2024 (with effect from November 30th, 2023), the Honorable Registrar Tan Boon Heng from the General Division of the High Court of Singapore issued a default judgment in favor of Fantom.”
Fantom criticized the Multichain team for their failure to collaborate after the security breach, prompting the Fantom Foundation to lodge a police report in Singapore, where Multichain is registered, and in Kunming, where an ongoing investigation targets Multichain and its founder. Subsequently, Fantom pursued legal proceedings against Multichain, alleging financial damages resulting from Multichain’s contract violation and deceptive claims.
Fantom Pursues Liquidation
After the ruling, Fantom Foundation seeks the High Court of Singapore to declare bankruptcy for the Multichain Foundation. Fantom aims to use this action to potentially reclaim the $122 million stolen from Multichain’s Fantom Bridge during the 2023 breach. This intent was conveyed by the Fantom Foundation in its recent blog post.
“In light of the recent verdict, we plan to leverage the financial losses incurred by Fantom Foundation to petition the court for the dissolution of the Multichain Foundation. We aim to have a liquidator appointed, akin to Chapter 7 bankruptcy proceedings in the US, to facilitate the recovery and distribution of assets that are either missing or frozen.”
Fantom announced that the court would evaluate the damages incurred and subsequently issue Multichain a Statutory Demand to settle the assessed amount. However, Fantom expressed skepticism regarding Multichain’s ability to fulfill the payment. In the event of non-payment, Fantom intends to petition the court for the appointment of a liquidator. This appointed official would be empowered to assume control over Multichain Foundation’s assets and undertake efforts to recover them for the repayment of purported creditors.
“Representing all impacted stakeholders, the liquidator will possess specialized skills in tracing and retrieving assets. They will also wield legal authority to reclaim bridge assets, evaluate and handle claims, and distribute any retrieved funds.”
Establishing a Precedent
Fantom restated that the court’s ruling pertained solely to its own losses. Nevertheless, it intends to leverage this legal triumph to provide a channel for all impacted users to assert their individual claims against Multichain. Multichain has yet to respond to the judgment. According to blockchain security firm Beosin, Multichain’s total losses from the exploit reached $210 million. During the incident, blockchain security firm Chainalysis suggested that compromised administrator keys might have facilitated the exploit, hinting at a potential inside job.
