This move not only reflects Sonic Labs’ effort to recover its losses but also highlights the growing regulatory pressure and need for accountability within decentralized finance (DeFi) projects.

Why Was Multichain Liquidated?

Once a leading player in cross-chain bridge technology, Multichain began to unravel after a large-scale cyberattack in July 2023, which led to the theft of over $210 million in crypto assets. In the aftermath, it was revealed that Multichain’s CEO had been detained in China and held exclusive control over critical system functions.

This created a situation where the platform became operationally paralyzed, leaving users unable to access their funds. When no internal solution appeared possible, Sonic Labs turned to legal action and requested the court to initiate liquidation. The court’s approval is seen as a significant development in terms of transparency and responsibility in the crypto space.

What Does the Liquidation Process Mean for the Crypto Industry?

Liquidating the Multichain Foundation means that its assets will be sold under legal supervision to reimburse affected parties—especially major victims like Sonic Labs. While this doesn’t guarantee the full recovery of losses, it represents a rare legal route in the crypto world.

This decision could set a legal precedent. By seeking justice through formal procedures, Sonic Labs shows that crypto projects can no longer operate without oversight or consequences.

Can Sonic Labs Recover All Its Losses?

The biggest question is how much of the $210 million loss Sonic Labs will be able to recover. Although the liquidation decision is a positive step, identifying, evaluating, and fairly distributing the remaining assets is a complex and lengthy process. There is also a strong possibility that a large portion of the stolen funds has been moved across different networks or laundered.

Nevertheless, this move is crucial for rebuilding trust—both for Sonic Labs and the broader crypto ecosystem. It signals that so-called decentralized projects can still be held legally accountable, and their internal structures are not beyond regulatory reach.

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Later proven to be a hack, the Chinese cross-chain protocol Multichain Foundation observed shockingly high outflows in July 2023. Many protocols connected to the chain therefore became victims of the attack, resulting in the loss of about $210 million in assets spanning several chains, including Fantom, Ethereum, BND, Cronos, Polygon, Arbitrum, zkSync, Optimism, and Moonbeam.

After declaring its financial losses to the Singapore High Court, Fantom Foundation sought reimbursement for the damages endured.

While Multichain’s officials missed the recent court hearing on June 3, Fantom’s representatives submitted evidence gathered over the year to the Singapore court.

“The Claimant’s position is that the CEO of the First Defendant had ultimate privileges and control over the cryptocurrency assets stored in the Multichain Bridge,” says the statement.

Multichain admitted this claim on X and violated the user agreement as well, the court said.

The court decided on July 8 to award Fantom $2.187 million for losses experienced during the hack. Fantom earlier claimed, though, that the losses in her ecosystem accounted for about one-third of all losses totaling $210 million.

Research on blockchain security company Immunefi shows that crypto losses from hacks and scams more than doubled in the second quarter of 2024 compared to the same period the previous year.

Comparatively to just $220 million in Q2 2023, hacks cost over $572 million in Q2. Most of the losses in the quarter came from centralized exchange hacking.

Hacker and scam losses had been dropping before the second quarter; Immunefi notes a 23% drop in Q1. This drop persisted through April and most of May, then peaked at the end of June.

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