A New York judge has granted a temporary extension on the freeze of wallets containing approximately $63 million in stolen USDC stablecoins. This decision came in response to a request from the Singapore liquidators of collapsed crypto bridge Multichain, who are seeking U.S. recognition of the case.
Judge David S. Jones has instructed Circle to maintain the freeze on three Ethereum wallets and preserve the dollar reserves that back the stolen USDC. This measure is aimed at preventing any immediate and irreparable harm that could occur if the freeze was lifted, allowing the assets to be moved or claimed outside of the jurisdiction.
Additionally, the extension of the freeze has put a pause on a class action lawsuit filed by a group of U.S. investors who were seeking control of the same $63 million through litigation against Circle. The case was transferred from New York state court to the Southern District of New York following Circle’s invocation of the Class Action Fairness Act.
Under Section 1519 of the U.S. Bankruptcy Code, the temporary relief granted by the court will allow for the protection of assets before the formal recognition of the foreign case. The court will review whether the Singapore liquidation qualifies as a “foreign main proceeding” under Chapter 15, which governs cross-border cooperation in insolvency.
If recognized, the Singapore liquidators will be authorized to take action in the U.S. to locate, preserve, and recover Multichain’s assets under coordinated court supervision. Decrypt has reached out to Circle, Joel H. Levitin, the attorney for Multichain, and the three Multichain liquidators at KPMG Singapore for comment.
Multichain, previously known as Anyswap, was a prominent cross-chain asset bridge in the cryptocurrency industry. The platform facilitated the seamless transfer of assets between various networks such as Binance Chain, Avalanche, Polygon, and Ethereum without the need for selling or converting tokens.
The troubles for Multichain began in May 2023 when transactions started freezing, and reports emerged that CEO Zhaojun had been arrested and detained in China. By July of the same year, over $125 million in assets were moved from Multichain’s wallets in suspicious transfers to unknown addresses, leading to the immediate shutdown of its bridge operations.
At its peak, the Multichain bridge had a total value locked of approximately $9.2 billion in early 2022, as reported by DefiLlama. The ongoing legal proceedings will be crucial in determining the future of the frozen assets and the recovery of funds for affected investors.
