Sonic Labs Wins Court Order to Liquidate Multichain Foundation

Sonic Labs, formerly known as the Fantom Foundation, has secured a significant legal victory in its efforts to recover funds stolen during a 2023 hack. The Singapore High Court ruled in favor of Sonic Labs' motion to force the Multichain Foundation into liquidation. This decision, granted by Justice Kwek Mean Luck on May 9, allows for the appointment of liquidators from KPMG, a global audit, tax, and advisory firm, to oversee the process.

Sonic Labs CEO Michael Kong stated that the decision to file a lawsuit was necessitated by the uncooperative behavior of former Multichain employees, who were allegedly hiding from victims. Kong emphasized that the liquidators can now begin working with other parties to initiate the process of recovering funds, which, if successful, will eventually be returned to users.

The hack, which occurred in July 2023, resulted in substantial losses across multiple chains, including Fantom, Ethereum, BNB, Cronos, and Polygon. Blockchain security firm Beosin and Fantom estimated that the total losses for all chains were at least $210 million. The legal action against Multichain began in January 2024, when the High Court of Singapore granted a default judgment ruling in favor of Sonic Labs for breach of contract and fraudulent misrepresentations. Fantom had claimed that the cross-chain protocol had lost $122 million of its funds.

Following the January ruling, Sonic Labs announced in March 2024 that it would use the legal victory to petition the court to wind up the Multichain Foundation and appoint a liquidator. This move is akin to a Chapter 7 bankruptcy in the US and aims to help recover and distribute missing or frozen assets. Sonic Labs also indicated that it planned to use the legal win to assist other victims of the Multichain hack in lodging claims for their losses.

Multichain shut down in July 2024 due to a lack of operational funds and following the detention of its CEO, known as Zhaojun, by Chinese police. The liquidation process, now underway, represents a critical step in the recovery efforts for the victims of the hack, providing a pathway for the potential return of stolen funds.