Claims related to $63 million in Multichain USDC that was previously frozen are currently being processed by a United States court, with cooperative efforts being undertaken between authorities in New York and Singapore.
A temporary extension of a freezing order on accounts containing approximately $63 million in purloined USDC stablecoins was granted by a New York judge on Thursday. This decision supported a petition from the Singapore-based liquidators of the defunct crypto-bridge Multichain as they currently pursue formal American legal recognition of the proceedings.
An order was issued by Judge David S. Jones directing Circle to maintain a freeze on three distinct Ethereum digital accounts and to ensure that the backing dollar reserves for the compromised USDC are preserved.
The liquidators cautioned that the mandate would assist in preventing “potential imminent and irremediable damage” if the state judiciary were to remove Circle’s hold, thereby permitting the assets to be transferred or to be asserted outside of its jurisdiction.
The action also temporarily suspends a distinct class action lawsuit, in which control over the identical $63 million had been sought by a cohort of American investors through legal proceedings initiated against Circle.
The aforementioned legal action was transferred from a New York state court to the Southern District of New York last Friday after Circle utilized the Class Action Fairness Act. This legislation permits substantial class action proceedings involving parties from different states to be reviewed in the federal court system.
The judicial directive continues to be provisional under Section 1519 of the U.S. Bankruptcy Code, a provision that permits courts to issue interim protective measures when prompt action is required to safeguard holdings before an international legal proceeding is officially acknowledged.
In this specific situation, a formal assessment would be conducted by the court to ascertain whether the winding-down process in Singapore qualifies as a “foreign main proceeding” as defined under Chapter 15, the section that governs international collaboration in matters of financial distress.
Singapore Liquidators May Gain U.S. Authority to Recover Multichain Assets
If formal recognition is achieved, the Singaporean liquidators would be empowered to operate within the U.S. to identify, secure, and reclaim the financial holdings of Multichain under a unified court oversight.
Contact was made seeking a statement from Circle, as well as from Joel H. Levitin, who represents Multichain, and the three Multichain liquidators currently operating out of KPMG Singapore.
Multichain, previously identified as Anyswap, was recognized as a prominent digital asset conduit within the crypto space, successfully connecting diverse networks such as Binance Chain, Avalanche, Polygon, and Ethereum.
A cross-chain asset bridge operates by locking digital assets on a source network and subsequently creating equivalent substitute tokens on a different destination network. This mechanism permits users to transfer their holdings between platforms that are otherwise separate without the necessity of outright selling or converting the original assets.
At its peak operation, a total worth of approximately $9.2 billion was secured on the bridge in early 2022, according to the metrics provided by the platform DefiLlama.
Its difficulties first emerged in May 2023 when various digital transactions started freezing and accounts began to appear reporting that its chief executive, Zhaojun, had been apprehended and placed in custody in mainland China.
By July of the corresponding year, a sum exceeding $125 million in digital assets was transferred out of Multichain’s accounts in transactions that the internal team characterized as “unusual” movements to unidentified recipients, which then prompted an immediate cessation of all bridge services.
