Another Fantom Project Shuts Down Due to Multichain Exposure
SpiritSwap, a decentralized exchange (DEX) built on the smart contract platform Fantom, has announced that it will wind down operations starting from September 1. The reason behind this decision is the exposure to the troubled Chinese cross-chain protocol Multichain, which left SpiritSwap’s entire treasury drained due to a hack.
In an announcement made on Discord on August 9, the developers of SpiritSwap revealed that they no longer have the means to finance essential aspects of their operation, including operational costs, salaries, and marketing, as a result of the Multichain hack. The team is currently seeking a team to take over the DEX by September 1. If no change of ownership occurs by then, the DEX will have no choice but to cease operations entirely.
SpiritSwap, which was founded in 2021, was one of the popular DEXs on Fantom prior to the cryptocurrency bear market. Its total value locked (TVL) reached an all-time high of $374 million in January 2022. However, due to the Multichain incident, the TVL has significantly dropped and currently stands at $2.92 million.
The Multichain Hack and its Impact
The Multichain hack that impacted SpiritSwap has been surrounded by speculation for months. In May, the developers of Multichain disclosed that the co-founder and CEO, Zhanojung He, had been arrested by Chinese police for unknown charges. He allegedly held all access to Multichain private keys and servers at the time of his detention.
Since then, funds belonging to Multichain and its users have been swapped for stablecoins and private coins, and transferred out of the protocol. Some victims have even alleged that the Chinese police are involved in an elaborate embezzlement scheme related to users’ funds.
Before the incident, Multichain was Fantom’s cross-chain protocol of choice. However, as a result of the hack, Fantom’s TVL dropped from $364 million in early May to $72 million currently. Geist Finance, Fantom’s lending protocol, also announced its shutdown due to exposure to Multichain.
The Future of SpiritSwap
With the announcement of SpiritSwap winding down its operations, the team is actively seeking a team to take over the DEX. If a transition of ownership is successful by September 1, operations will continue under new management. However, if no new team is found, SpiritSwap will permanently cease its operations.
For users of SpiritSwap, a guide will be developed to help them withdraw their remaining $SPIRIT tokens as they become unlocked.
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