Circle, the official issuer of USDC, the second largest stablecoin by circulating supply, has frozen $63 million from the Multichain hack. Compiled Etherscan data on July 7 shows that the stablecoin issuer froze $27.65 million, $30.1 million, and $5.5 million in three transactions, hampering the hacker’s cash-out efforts.

Multichain Hacked, Circle Intervenes

Multichain, a cross-chain protocol router, was hacked on July 7, resulting in the loss of over $126 million worth of various tokens. The exploit came after the attacker illegally accessed Multichain’s Multi-Party Computation (MPC) address, which stores funds locked between blockchains.

Subsequently, the hacker withdrew funds from the address and moved them to an externally controlled wallet. The Fantom Bridge was adversely affected by this outflow as the hacker withdrew various tokens, including wBTC, USDC, and USDT. There were a handful of other altcoins that the hacker stole. 

Funds were also stripped from the Moonriver Bridge, with observers noting that at least $6.8 million worth of various coins, including USDC, were moved to an external address. It is also reported that an address associated with Multichain connecting with Dogecoin also lost over $600,000.

The stolen USDC has now been frozen and cannot be moved, a relief for the community. However, it is not clear whether Circle will reverse funds to Multichain. In the past, Tether Holdings and Circle, the centralized issuers of the world’s most liquid stablecoins, have intervened to prevent bad actors from cashing out.

Hack Compounding Multichain’s Woes, Bitcoin Firm

Peckshield, a blockchain security firm, was the first to pick out the unusual transfers of over $118 million worth of assets from Multichain’s Fantom and Moonriver bridges. The firm went on to tag the team behind the cross-chain protocol, who immediately acted.

In response to the hack, Multichain said the outflow was “abnormal” and halted all activity while recommending users pause their protocol and revoke all contracts approval. 

Although the Multichain team had assured the community that the private keys controlling asset movements through the bridge are secure and stored on-chain, their technology appears to have flaws, resulting in the hack. The hack marks what has also been a tumultuous past few weeks. Besides delayed transactions and what the team described as “multiple issues,” the founder is missing.

Despite the attack, Bitcoin prices are firm when writing. The coin is above the $30,000 psychological support, rejecting bear pressure from July 6. However, FTM, the native currency of Fantom, is free-falling, dumping 20% from July highs.

Feature image from Canva, chart from TradingView