In a significant legal development, the Singapore High Court has officially declared the Multichain Foundation bankrupt and approved a petition by Sonic Labs to appoint liquidators.
The court ruling, issued on May 9, 2025, follows a prolonged legal battle led by Sonic Labs after the Multichain Foundation failed to recover from a major security breach in July 2023.
KPMG has been designated as the official liquidator and will be responsible for managing the foundation’s remaining assets, initiating asset recovery, and distributing any recovered funds to affected users.
The decision comes nearly a year after Multichain ceased all operations and is expected to pave the way for further legal actions by other victims.
Background: A $210 Million Cross-Chain Collapse
The roots of this bankruptcy stem from a massive hack in July 2023 that targeted the Multichain cross-chain protocol.
The attack led to a total estimated loss of over $210 million across multiple blockchain ecosystems, including Fantom and Ethereum, as reported by blockchain security firm Beosin and the Fantom network.
Despite mounting pressure, Multichain’s internal team, including its detained CEO Zhaojun, reportedly failed to cooperate with any investigation or recovery efforts.
Sonic Labs, a key stakeholder and victim of the breach, was forced to pursue legal action.
This happened as a result of what it described as consistent non-compliance and fraudulent misrepresentations by the Multichain team.
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Legal Action and Default Judgment Lead to Liquidation
In January 2024, the Singapore High Court issued a default judgment in favor of Sonic Labs, citing breach of contract, fraud, and misappropriation of funds by Multichain.
Sonic Labs alleged that $122 million of its funds were lost through Multichain’s mismanagement.
The company used this legal victory to formally request the court to wind up the Multichain Foundation and initiate bankruptcy proceedings.
The move mirrors a Chapter 7 bankruptcy filing in the United States and allows a third-party entity.
In this case, KPMG, to conduct a formal review of the foundation’s financials, trace remaining assets, and potentially restore part of the lost funds to investors and affected parties.
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Path Forward for Victims and the Crypto Community
The appointment of KPMG as liquidator is seen as a potential breakthrough for victims of the Multichain hack who have been waiting for accountability and restitution for nearly two years.
According to Sonic Labs CEO Michael Kong, the liquidation process will not only target the recovery of misappropriated assets but also provide a legal framework for other victims to file claims.
With Multichain having shut down operations in July 2024 due to a lack of funds and leadership.
Amid the arrest of its CEO, the bankruptcy proceedings are now the primary mechanism for asset recovery.
The case also serves as a cautionary tale in the decentralized finance space, underscoring the importance of legal recourse, cross-border regulation, and corporate transparency in the face of cybercrime.
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