Multichain collapse forces SpiritSwap to close its doors.
SpiritSwap, a notable decentralized exchange (DEX) on the Fantom platform, announced its decision to cease its operations on September 1st.
The move comes after a significant setback involving the Chinese cross-chain protocol, Multichain.
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On August 9th, SpiritSwap's developers used Discord to share a statement noting that the Multichain hack resulted in the SpiritSwap treasury's shortage.
Consequently, the DEX found itself "without the means to finance essential aspects of our operation," which encompasses operational costs, personnel salaries, and promotional campaigns.
In light of this, the SpiritSwap team is actively seeking potential successors for the platform. Unless a successful transfer of ownership takes place by the stipulated date, the DEX intends to discontinue its services entirely.
Established in 2021, SpiritSwap rapidly climbed the ranks to become one of Fantom's biggest DEXs, especially before the crypto bear market took hold. A testament to its success was the impressive total value locked (TVL) peak of $374 million at the beginning of 2022. However, recent events have seen this figure plummet to a mere $2.92 million, further worsened by the repercussions of the Multichain troubles.
Further shedding light on the Multichain controversy, it was unveiled that Zhanojung He, Multichain's co-founder, and CEO, had been taken into custody by Chinese law enforcement. The reasons for the arrest remain unclear.
What added to the protocol's woes was that He reportedly had exclusive access to the Multichain private keys and servers at the time of his arrest. Despite the limited details surrounding his detention, it has been observed that Multichain-associated funds have been exchanged for stablecoins and private coins and subsequently withdrawn from the platform.
Before this fiasco, Multichain was the preferred cross-chain protocol for Fantom. This incident, marked by a combination of confiscated assets and massive withdrawals, led to Fantom’s TVL taking a nosedive from $364 million in early May to its present $72 million.
The Multichain debacle serves as a stark reminder of the potential pitfalls and risks inherent in the rapidly evolving crypto landscape. As platforms like SpiritSwap winds down, the broader community will undoubtedly be looking for lessons to safeguard their assets and interests in the future.
