Multichain Liquidators Achieve Significant Ruling as New York Court Extends Freeze on Stolen USDC

Multichain Liquidators Achieve Significant Ruling as New York Court Extends Freeze on Stolen USDC

A bankruptcy court in New York has favored liquidators based in Singapore, overseeing the Multichain Foundation Ltd. collapse, by ordering the stablecoin issuer, Circle, to keep wallets with stolen USD Coin (USDC) frozen. This ruling is part of an international effort to recover over $210 million lost in one of 2023's largest DeFi hacks.

Key Takeaways

A New York court has extended the freeze on wallets holding over $63 million in stolen USDC.
This action is part of a larger international effort to recover funds lost during the Multichain hack in July 2023.
The court's ruling allows for temporary relief under U.S. Bankruptcy Code, supporting the liquidators' claim for cross-border cooperation.
The liquidators aim to protect the stolen assets from being transferred elsewhere before the court recognizes their case formally.

Understanding the Court's Decision in the Multichain Case

The U.S. Bankruptcy Court for the Southern District of New York, led by Judge David S. Jones, has made a pivotal ruling. It mandates that Circle, the issuer of the stablecoin USD Coin (USDC), freeze specific wallets that hold millions in stolen funds. This order supports the Singapore-based liquidators' ongoing efforts to reclaim assets lost during the infamous Multichain hack in July 2023.

Following the initial theft, which resulted in the loss of more than $210 million, the court's recent decision to extend the freeze on three Ethereum wallets associated with the incident is significant. The approximate $63 million in USDC will remain inaccessible until further notice.

Details of the Liquidation Process

The court's ruling stems from Section 1519 of the U.S. Bankruptcy Code. This provision allows for temporary relief while awaiting formal recognition under Chapter 15, which governs U.S. court cooperation in international insolvency cases.

Courtroom Session on Multichain Case

Liquidators from KPMG Services Pte. Ltd. filed for this relief on October 23. They stressed that any lifting of the freeze could result in "immediate and irreparable harm," potentially allowing the stolen assets to vanish beyond recovery. The ultimate aim is to maintain control over the funds until the U.S. court decides whether to officially recognize the Singapore liquidation case as a "foreign main proceeding." This designation would enable more robust recovery efforts across various jurisdictions.

Circle typically employs a procedure to blacklist addresses linked to thefts by leveraging its smart contract capabilities, which prevent any transactions involving those specific wallets. Initially, this freeze was enacted in October 2023 at the request of the U.S. Department of Justice (DOJ) after their investigation uncovered the theft. However, after the DOJ could not identify the offenders, the freeze was lifted, which led to the need for the recent court ruling.

The decision is also crucial in managing competing claims over the funds, especially since a group of U.S. investors filed a separate class-action lawsuit in New York State, aiming to gain control of the stolen assets. Following the federal court's decision, that class action is currently on hold, as Circle has transferred the matter to the federal court system through the Class Action Fairness Act, which enables multi-jurisdictional cases to be consolidated in federal court.

The Aftermath of the Multichain Collapse

The fall of Multichain is one of the most notable incidents in the decentralized finance (DeFi) arena and can be traced back to an exploit that occurred in July 2023. Over $125 million was siphoned from Multichain’s bridge contracts across multiple networks, including Fantom, Moonriver, and Dogechain, with funds rerouted to unknown wallets.

Once branded Anyswap, Multichain was a prominent cross-chain bridge protocol that facilitated users' asset transfers across various blockchains like Ethereum, BNB Chain, Avalanche, and Polygon. At its peak in early 2022, the platform boasted around $9.2 billion in total value locked, according to analysis by DeFiLlama.

Following the hacking incident, it was reported that the CEO, Zhaojun, had been detained in China, further complicating the situation. Legal actions by affected projects, including the Fantom Foundation, began in Singapore. By March 2024, the Singapore High Court awarded Fantom a default judgment, determining Multichain had violated contractual terms.

In May 2025, the Singapore court sanctioned a winding-up order for Multichain Foundation Ltd., appointing KPMG's Bob Yap Cheng Ghee, Toh Ai Ling, and Tan Yen Chiaw as joint liquidators responsible for the recovery and dissolution of the firm.

The seized $63 million in USDC represents only a fraction of the total stolen amount originating from the Multichain ethos. The liquidators emphasize that the New York court's provisional relief is a vital element in facilitating cooperation between the U.S. and foreign courts during their cross-border asset recovery efforts.