Court Orders Multichain Foundation Liquidation—Sonic Labs Secures Path for User Fund Recovery

In a landmark ruling that sent shockwaves through DeFi circles, Sonic Labs just scored a legal knockout against the collapsed Multichain Foundation. A Singapore court greenlit forced liquidation—finally offering hope for users left holding the bag after last year’s $1.5B bridge exploit.

The dominoes fall

With this move, Sonic’s legal team bypasses Multichain’s infamous radio silence—turning foundation assets into potential reimbursement pools. Liquidators now have a 90-day window to claw back anything salvageable from the wreckage.

Crypto’s accountability reckoning continues

While victims cheer, skeptics note the bitter irony: it took centralized courts to clean up decentralized finance’s mess. One hedge fund manager quipped, ‘Turns out ‘code is law’ works until you need actual lawyers.’

The 2023 Multichain exploit led to a significant loss for Sonic Labs

Multichain, a cross-chain bridge protocol formerly known as Anyswap, suffered a major security breach in July 2023, which led to an estimated $210 million being drained from multiple blockchain networks, including Fantom, Ethereum, BNB Chain, and others.

The incident dealt a heavy blow to users and decentralized apps that relied on the protocol to facilitate cross-chain asset transfers. Chainalysis suggested that it had some indications of a rug pull.

Sonic Labs, which was still known as the Fantom Foundation then, lost about $122 million due to the incident.

The loss of funds and the series of events that followed led to Multichain ceasing operations altogether. The whereabouts of CEO Zhaojun were also unknown for some time until it came to light that he was arrested by Chinese authorities due to the fallout of the breach.

Legal action and the path to liquidation

Sonic Labs filed for breach of contract, fraud, and loss of $122 million of its funds against Multichain in the High Court of Singapore, which granted a default judgment ruling in January 2024.

After the ruling, it was still hard to reach the Multichain team, prompting Sonic Labs in March 2024 to petition the court to wind up the Multichain Foundation and appoint a liquidator to help it recover and redistribute its assets.

The Singapore High Court ruling now enables the appointment of KPMG to oversee the liquidation of Multichain Foundation’s assets.

“Going forward, the liquidators can now start working with other parties to initiate the process of trying to acquire funds that should eventually be returned to users if those legal proceedings are successful,” added Kong.

The case also points to a growing trend of leveraging traditional legal systems to seek justice and restitution in the otherwise borderless and largely pseudonymous world of crypto. Some see this as a MOVE in the right direction, as the sector at large is pushing for more legitimacy and protection for users.

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