Investigating Chainalysis’ ‘Mysterious Withdrawals’ – Could It Be a ‘Rug Pull’?

Web 3.0 Crypto Tokens: Exploring the Multichain Exploit

Blockchain security and analytics firm Chainalysis has suggested that the multi-million dollar exploit of cross-chain bridge protocol Multichain could have been an internal rug pull.

On July 6, 2023, the firm wrote in a July 10 blog post, Multichain experienced unusually large, unauthorized withdrawals in what appears to be a hack or rug pull by insiders, resulting in the loss of more than $125 million.

Chainalysis believes that the exploit may have been the result of administrator keys being compromised, indicating that it could have been an “inside job.”

As the world of Web 3.0 and crypto tokens continues to evolve, it is increasingly important to understand the implications of exploits such as this one. With the right knowledge and tools, users can protect themselves from similar situations in the future.

Multichain’s Smart Contracts Explained

In an official statement to Cointelegraph, Chainalysis confirmed that the incident involving Multichain could be a “rug pull”. The firm further explained that the platform makes use of a multi-party computation (MPC) system, similar to a multi-signature wallet.

“It is possible that the attacker gained control of Multichain’s MPC keys in order to pull off this exploit,” Chainalysis stated.

The most notable example of the internal issues that Multichain experienced was the disappearance of its CEO, known as “Zhaojun”, in late May. Additionally, the platform suffered from delayed transactions and other technical issues, which led Binance to end its support for several of the bridged tokens on July 7.

Crypto This Week: Multichain Exploit

Cointelegraph contacted Multichain to respond to the allegations, but there was no response at the time of publication.

At the same time, blockchain experts have reported more suspicious movements of Multichain tokens over the past few hours. According to them, the abnormal outflows were due to the Multichain Executor address draining anyToken addresses on various chains.

On July 8, Circle and Tether, issuers of stablecoins, blocked more than $65 million in assets associated with the Multichain exploit.

Chainalysis noted that it is interesting that the hacker did not exchange centrally controlled assets such as USDC, which can be frozen by the issuer.