​GT token drops by 8% amid rumors of an investigation into the Gate exchange

What’s new? Analyst Colin Wu has reported a possible police investigation into the Gate crypto exchange. Over the past 24 hours, users have withdrawn more than $130 million from the platform, representing more than 10% of the exchange’s $1,26 billion in net reserves. Gate representatives responded that all transactions and withdrawals from the platform are proceeding normally. Meanwhile, amid the rumors, the exchange token GT plummeted by 8% overnight and is trading at $4,46 as of 11:30 UTC.

Due to community rumors being investigated by the police, Gate had a net outflow of US$130 million in the past 24 hours, accounting for about 10% of its net reserve assets of US$1.26 billion (excluding GT). Gate responded that all operations and withdrawals are normal.… — Wu Blockchain (@WuBlockchain) June 1, 2023

The centralized exchange (CEX) Gate was founded in 2013. It is registered in Hong Kong and has over 12 million users worldwide. There are 1695 coins available on the platform, with daily trading volume exceeding $491 million as of May 1.

Details about the situation. The day before, users also suggested that the exchange is experiencing liquidity problems due to the possible impact of the Multichain protocol. Thus, on May 24, analysts at Arkham Intelligence recorded an influx of native tokens MULTI to Gate from large holders and the project’s team, linking this to rumors about the arrest of Multichain developers in Shanghai.

Following rumours of the @MultichainOrg team being allegedly arrested in Shanghai, some large holders of $MULTI have began moving funds.Team wallets moving ~$3M of $MULTI to https://t.co/5ecSG3rKek have also spooked some investors, with $MULTI price falling 26.5% in 24h. pic.twitter.com/p2sQpu9Ass — Arkham (@ArkhamIntel) May 24, 2023

The next day, Binance suspended depositing tokens wrapped with Multichain, including the coin of the Fantom (FTM) blockchain. During the same period, an unknown user moved $10 million worth of FTM coins to Gate. Some users speculated that large deposits into MULTI and FTM were coming from the Multichain team, and the exchange was impacted by the protocol incident.

We'll be temporarily suspending deposits for the following bridged tokens-network while we await clarity from the Multichain team.POLS-BSCACH-BSCBIFI-FTMSUPER-BSCAVA-ETHSPELL-AVAXCALPACA-FTMFTM-ETHFARM-BSCDEXE-BSCDeposits of the above assets on other networks are… — Binance (@binance) May 25, 2023

So, on May 31, Multichain said that the project’s CEO was missing and that some protocol routers were down because only he had access to the relevant servers. The team asked users not to use smart contracts on Kekchain, PublicMint, Dyno Chain, Red Light Chain, Dexit, Ekta, HPB, ONUS, Omax, Findora, and Planq.

In the past two days, the Multichain protocol has experienced multiple issues due to unforeseeable circumstances. The team has done everything possible to maintain the protocol running, but we are currently unable to contact CEO Zhaojun and obtain the necessary server access for… — Multichain (Previously Anyswap) (@MultichainOrg) May 31, 2023

Gate representatives denied any problems with operations on the platform, adding that they are focused on the recent launch of the Hong Kong unit.

Chinese police seal the office of the issuer of the CNHC and HKDC stablecoins

According to journalists, the investigation may be related to the company’s cross-border payment business

Read further

High-profile investigations in the crypto industry. The Ontario securities regulator and the US Department of Justice are currently investigating the crypto exchange Binance. Previously, the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against the platform.

In March, the US Securities and Exchange Commission (SEC) sued the SushiSwap exchange, and in February, the New York regulator began investigating fintech company Paxos, an issuer of BUSD and USDP stablecoins. That same month, the media reported on an SEC investigation into crypto exchange Kraken for offering unregistered securities.