All vulnerabilities
CRITICALWeb3

WEB3-MULTICHAIN-2023

Web3 · Bridge · Multichain

Summary

On July 6, 2023, the cross-chain bridge Multichain saw unusually large unauthorized withdrawals totaling about $126 million (roughly $120 million from the Fantom bridge plus smaller amounts on Moonriver and Dogechain), with broader figures up to ~$210 million once a separate tranche moved on July 10. The root cause was an admin/MPC private-key compromise driven by centralization rather than a contract bug. Multichain's withdrawals were nominally signed by MPC nodes each holding a key share, but in practice the MPC servers all ran under CEO Zhaojun's personal cloud account and the key material (hardware wallets, mnemonic phrases) sat on devices he personally controlled, so the multi-party threshold collapsed to a single point of control; a Singapore court later found he held ultimate privileges over the assets. After Zhaojun was detained by Chinese police in May 2023 and his devices, hardware wallets, mnemonic phrases and the MPC wallet were confiscated, control passed to whoever physically held the keys, and funds were moved from MPC-controlled pool addresses to unknown wallets. The event is widely treated as a possible insider job or rug pull, though that intent was never proven; Multichain ceased operations indefinitely and funds were not recovered.

How to avoid it in your code

  • Genuinely distribute MPC shares across independent operators in separate jurisdictions and legal entities, never one person's cloud account.
  • Enforce a quorum where no single party or family can reach the signing threshold.
  • Run a transparent, audited key-generation ceremony with verifiable randomness and published attestations.
  • Apply on-chain withdrawal rate limits and time-locks so one key compromise cannot drain reserves in a single session.
  • Deploy real-time anomaly monitoring with automated circuit-breakers that auto-pause on abnormal admin or MPC outflows.

References

Related vulnerabilities

All Web3 →