A New York court has extended a freeze on $63 million stolen USDC, originally compromised in the Multichain hack, based on a request from its Singapore-appointed liquidators.
This legal extension highlights cross-border efforts to recover funds and stresses the vulnerabilities in decentralized financial systems, affecting broader market confidence and regulatory scrutiny.
A New York court has temporarily extended a freeze on $63 million in stolen USDC belonging to Multichain Foundation Ltd., following a request from Singapore-appointed liquidators.
This extension highlights ongoing legal efforts to recover assets after Multichain was compromised in a $210 million hack in July 2023.
USDC Freeze Extension Amid Multichain Liquidation
The New York court's decision to extend the freeze on $63 million in USDC is part of recovery efforts by Multichain liquidators. The incident originated from a $210 million hack in July 2023.
Sonic Labs and its CEO, Michael Kong, along with KPMG liquidators, lead these efforts. The Singapore-appointed liquidators aim to return assets to affected parties through legal proceedings.
Circle Ordered to Back USDC with Dollar Reserves
The immediate effects include retaining control over the stolen USDC while legal proceedings unfold. Circle Inc., responsible for USDC, is ordered to maintain dollar reserves backing these frozen assets.
Financial implications involve a potential payout to Sonic Labs, as the Singapore court ordered a compensation of $2.18 million, contingent on asset recovery from Multichain's remaining holdings.
Cross-Chain Protocols Under Regulatory Scrutiny
Similar cases like the Poly Network and Nomad Bridge hacks illustrate common vulnerabilities in centralized admin controls. Historically, these incidents resulted in large-scale asset freezes.
Potential outcomes pointed out by experts may involve regulatory scrutiny over cross-chain protocols. Such scrutiny often leads to calls for reform, emphasizing the need for decentralized control mechanisms.
"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." — Michael Kong, CEO, Sonic Labs