The platform’s contracts were suspended back on July 6

​Crypto lending protocol Geist Finance announces its closure due to the Multichain hack

17.07.2023 - 08:00


3 min

What’s new? On July 14, the team of the crypto lending protocol Geist Finance announced the closure of the project due to losses from the Multichain cross-chain protocol exploit. The platform’s contracts were suspended on July 6 and resumed on July 9 for withdrawals and repays only. According to a Twitter post, Chainlink’s decentralized oracle network stopped providing accurate information about the collateral and loan value of assets. The platform was indicating prices of original USDC, USDT, BTC, and ETH that were more than four times the value of their Multichain derivatives.

Geist is a lending protocol on the Fantom network. Prior to the Multichain hack, over $29 million worth of cryptocurrencies were locked in its contracts. Geist allowed borrowing, lending, or use as collateral wrapped cross-chain tokens from the Multichain platform, including USDC, USDT, BTC, and ETH. Chainlink’s oracle network was used to determine the collateral and loan value of these assets.

What else is known? Unreliable information on asset prices made it impossible to restart lending as it would have resulted in bad debts for non-Multichain coin holders such as Magic Internet Money (MIM) or Fantom, the Geist team said.

The platform’s representatives clarified that they do not blame Chainlink oracles for Geist’s closure, as oracles “worked as they should.” According to them, “Nobody is to blame except Multichain here.”

About the Multichain hack. On July 6, members of the crypto community recorded an abnormal outflow of funds from the cross-chain protocol. The attack affected Fantom, Moonriver, and Dogechain bridges, and the total amount of damage amounted to about $108 million. Stablecoin issuers Circle and Tether later froze more than $65 million in assets related to the hack.

On July 14, representatives of Multichain reported the complete shutdown of the project due to the hack that affected user funds, as well as the arrest of CEO Zhaojun by the Chinese police on May 21, after which he stopped communicating.

Thus, all fragments of the project’s private keys were stored in a cloud server account under his sole control. Gaining access to this account allowed the hacker to withdraw funds. Zhaojun’s sister, on behalf of the Multichain team, transferred the remaining user funds to a router pool to preserve them but was also later arrested, making the status of the assets currently uncertain.

Following the announcement of Multichain’s closure, Fantom’s total value locked (TVL) dropped from over $364 million in early May to ~$70 million (DefiLlama’s data). Fantom co-founder Andre Cronje called the Multichain hack a “big blow” to his platform.

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