General Update on Multichain

August 14, 2023

Greetings Syscoin Community!

We are providing this update on recent events involving Multichain because there are some users within our ecosystem who have been adversely affected by Multichain’s failure. We are saddened by this. Even so, it’s important to point out that the Syscoin ecosystem as a whole was not impacted nearly as much as many of the other ecosystems that Multichain had integrated with. 

If you haven't watched Corey Costa's recent interview with Michael Kong of Fantom Foundation and our own Jag Sidhu of Syscoin Foundation, we recommend it. It covers much of this update in detail.

A group of the most affected blockchain projects are coordinating with a legal team in China to pursue Multichain funds, most of which are either still locked or have been moved to centralized exchanges. Those exchanges have been made aware. The funds are being monitored closely by a lot of people. According to Fantom Foundation, the legal team is in contact with the authorities in China. The legal team has reportedly confirmed that the Multichain CEO is indeed in custody. However, there is no knowledge available as to what charges have been brought against him, if any.

There is the possibility of funds being returned as a result of these efforts. This is now a legal matter. Once the legal effort concludes, depending on the final result, the Syscoin Foundation can consider the possibility of intervention for affected Syscoin users, depending on various factors at that future time.

We do not recommend any financial speculation based upon this information.

All tokens and liquidity pools on Rollux are unaffected as they are not Multichain-based tokens.

Affected tokens are specific to Syscoin NEVM (L1) and/or the Multichain bridge, as follows:

If you are participating in a liquidity pool with WSYS, PSYS or LUXY paired to any of the above tokens in v1 Pegasys (https://v1.pegasys.fi) on Syscoin NEVM, we recommend withdrawing from the liquidity pool.

If you own any of the affected tokens listed above on Syscoin NEVM, or any of your tokens are “stuck” in Multichain (have not reached their destination), you may choose to treat these as "IOUs" with Multichain as the debtor. In that case, continuing to hold them would help give you a chance to be made whole as a result of any legal effort. If you swap them, you will likely give up your "IOUs" and will have effectively settled the matter yourself in its entirety, possibly forfeiting any chance of reimbursement through legal efforts.

Unaffected tokens on Syscoin NEVM (L1).  These are fine:

WSYS: If you are holding Wrapped SYS on Syscoin NEVM, it is unaffected, as it is native to our ecosystem (not Multichain-based). However, any WSYS on any other chain, is affected.

LUXY (https://explorer.syscoin.org/address/0x6b7a87899490EcE95443e979cA9485CBE7E71522):

The Luxy Marketplace team is in process of establishing LUXY as a native token within the Syscoin/Rollux ecosystem. A tool to swap to the new LUXY will be provided when the token is ready. If you have questions about LUXY, join their Discord (https://discord.gg/luxy). The LUXY native token will be unaffected.

Be assured that the Syscoin Foundation is doing everything in its power to help prevent, avoid or limit similar third-party incidents in the future. However, keep in mind that Syscoin and Rollux are decentralized open-participation networks just like Ethereum or Bitcoin, meaning any project can integrate and offer services. Therefore your own due diligence is always necessary. We appreciate your support!