Multichain ceases operations as CEO's sister is detained in China while holding $220 million of funds

Quick Take

  • Multichain confirmed its CEO has been detained in China.
  • It said the CEO’s sister moved $220 million of funds after there was abnormal movement and has now also been detained.
  • The project is ceasing operations as a result.

Cross-chain project Multichain has confirmed, after weeks of rumors, that its CEO Zhaojun was detained by Chinese police and is still under custody.

The project said that Chinese police took his computers, phones, hardware wallets, and mnemonic phrases. While the project is protected by multi-party computation, the servers running this were controlled by Zhaojun's personal cloud server account. As a result, when he was detained, those who would normally sign such transactions had their access revoked — hence why the project was unable to initially fix its technical issues.

The project noted that all operational funds and investor funds were under Zhaojun's control and are now with the Chinese police.

On June 4, Multichain team engineers managed to fix the project's technical issues after getting access via historical information on Zhaojun's home computer.

On July 7, funds were moved abnormally from the network. The cloud server platform showed a login from an IP address in Kunming, China, according to Zhaojun's sister, the project said. Two days later, she transferred $220 million of remaining user assets — primarily stablecoins and ether — into new wallets under her control.

On July 13, Chinese police took Zhaojun's sister into custody too, the project said, and the project is unclear about the status of the assets.

"Due to the lack of alternative sources of information and corresponding operational funds, the team is forced to cease operations," it said.

Multichain also explained that it did not disclose the information that Zhaojun was detained throughout the last few weeks due to local laws and regulations. At first it said there was a force majeure incidence and later said it had lost contact with the CEO but had not confirmed that he was detained.

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