A Singapore High Court has ruled in favor of Sonic Labs' motion to force the Multichain Foundation to wind up

input: A Singapore High Court has ruled in favor of Sonic Labs’ motion to force the Multichain Foundation to wind up in an effort to recover funds stolen during a 2023 hack.

A Singapore High Court has ruled in favor of Sonic Labs' motion to force the Multichain Foundation into liquidation in an effort to recover funds stolen during a 2023 hack.

The judgment, delivered by Justice Kwek Mean Luck on May 9 and seen by Blockworks, grants a request from Sonic Labs, formerly the Fantom Foundation, to declare Multichain bankrupt and appoints liquidators from global audit, tax and advisory service KPMG.

Sonic Labs CEO Michael Kong said in a May 14 statement on X that the team behind the layer 1 Sonic blockchain felt it had no choice but to file a lawsuit to forcibly wind up Multichain because its former employees were being “completely uncooperative” and “hid from victims.”

“Going forward, the liquidators can now start working with other parties to initiate the process of trying to acquire funds that should eventually be returned to users if those legal proceedings are successful,” Kong said.

In July 2023, the Multichain Foundation experienced abnormally large outflows, later confirmed by the crosschain protocol as a hack, leading to the loss of assets across multiple chains, including Fantom, Ethereum, BNB, Cronos and Polygon.

Blockchain security firm Beosin and Fantom estimated in an August 2023 report that the total losses for all chains were at least $210 million.

Wind up action followed legal win

The High Court of Singapore granted a default judgment ruling in January 2024 as part of Sonic Labs' legal action against Multichain for breach of contract, fraudulent misrepresentations and claims the crosschain protocol had lost $122 million of its funds.

Following the ruling, Sonic Labs said in March 2024 it would leverage the legal win to petition the court to wind up the Multichain Foundation and appoint a liquidator, equivalent to a Chapter 7 bankruptcy in the US, to help recover and distribute missing or frozen assets.

Previously, Sonic Labs indicated it planned to use the legal win to forge a path for other victims of the Multichain hack to lodge claims for their losses as well.

Multichain shut down in July 2024 due to a lack of operational funds, and after its CEO, known as Zhaojun, was detained by Chinese police.