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Multichain Liquidators Win Key Ruling as New York Court Extends Freeze on Stolen USDC

A New York chapter courtroom has granted provisional reduction to Singapore-based liquidators overseeing the collapse of Multichain Foundation Ltd., directing stablecoin issuer Circle to maintain wallets holding tens of millions of {dollars} in stolen USD Coin (USDC) frozen.

Judge David S. Jones of the U.S. Bankruptcy Court for the Southern District of New York issued the order on Thursday, extending the freeze on three Ethereum wallets tied to the July 2023 Multichain hack.

The ruling requires Circle to take care of the addresses on its blacklist, successfully blocking any motion of the roughly $63 million in stolen USDC till additional discover.

The courtroom’s determination marks a serious step within the cross-border effort to recuperate property drained from Multichain’s cross-chain bridge protocol, which misplaced greater than $210 million in one in all 2023’s largest DeFi exploits.

Inside the Multichain Case: How Liquidators Win by Freezing USDC

The order, issued beneath Section 1519 of the U.S. Bankruptcy Code, permits momentary reduction earlier than a international case receives formal recognition beneath Chapter 15, the framework that governs cooperation between U.S. courts and international insolvency proceedings.

Source: Cornell Law School

Liquidators appointed in Singapore, from KPMG Services Pte. Ltd., filed for provisional reduction on October 23, arguing that lifting Circle’s freeze might trigger “fast and irreparable hurt” by permitting stolen property to maneuver past restoration.

The request sought to protect the funds till the U.S. courtroom determines whether or not to acknowledge the Singapore case as a “international foremost continuing,” a designation that may enable the liquidators to pursue restoration efforts throughout jurisdictions.

Circle, which points the U.S. greenback–pegged USDC stablecoin, sometimes enforces freezes by blacklisting addresses instantly by way of the token’s good contract, a function that blocks any transfers involving these wallets.

The firm first froze the three hacker-linked addresses in October 2023 on the route of the U.S. Department of Justice (DOJ), which obtained a seizure warrant shortly after the exploit.

The DOJ later lifted the warrant after failing to establish the hackers, leaving Circle with no authorized foundation to maintain the wallets locked. The newest order restores that authority.

According to the courtroom submitting, the freeze is critical to stop competing claims over the identical funds. A gaggle of U.S. traders had filed a separate class motion lawsuit towards Circle in New York State courtroom, searching for management of the stolen USDC.

That case has now been paused following the federal courtroom’s ruling. Circle moved the matter to the Southern District of New York beneath the Class Action Fairness Act, which permits giant, multi-jurisdictional class actions to be heard in federal courtroom.

After the $125M Hack, Multichain Faces Its Final Chapter in Court

The Multichain collapse, one of the most high-profile failures within the decentralized finance sector, stemmed from an exploit found in July 2023.

Unidentified attackers drained over $125 million from Multichain’s bridge contracts on Fantom, Moonriver, and Dogechain, transferring funds to unknown addresses.

Multichain, previously recognized as Anyswap, operated as one of many largest cross-chain bridge protocols, permitting customers to maneuver property throughout blockchains like Ethereum, BNB Chain, Avalanche, and Polygon.

The platform had a complete worth locked of about $9.2 billion in early 2022, according to information from DeFiLlama, earlier than its troubles started in mid-2023.

Reports later surfaced that the corporate’s CEO, recognized as Zhaojun, had been detained in China, leaving the venture in disarray.

Following the hack, affected initiatives, together with the Fantom Foundation, launched authorized actions in Singapore. In March 2024, the High Court of Singapore issued a default judgment in Fantom’s favor, discovering that Multichain had breached contractual obligations.

By May 2025, the identical courtroom approved a winding-up order against Multichain Foundation Ltd., appointing KPMG’s Bob Yap Cheng Ghee, Toh Ai Ling, and Tan Yen Chiaw as joint liquidators to supervise asset restoration and dissolution.

The frozen $63 million in USDC represents a portion of the full $210 million stolen from Multichain. The liquidators are searching for to recuperate these property as a part of the broader winding-up course of.

In their U.S. submitting, they described the New York courtroom’s provisional reduction as “an efficient mechanism to implement Chapter 15’s insurance policies of selling cooperation between courts of the United States and international courts concerned in cross-border restructuring circumstances.”

The publish Multichain Liquidators Win Key Ruling as New York Court Extends Freeze on Stolen USDC appeared first on Cryptonews.

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