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SpiritSwap, a decentralized exchange (DEX) operating on the smart contract platform Fantom, will cease its operations starting September 1, citing its exposure to the troubled Chinese cross-chain protocol Multichain.
In an announcement made on August 9 via Discord, the developers indicated that the hack of Multichain had completely depleted SpiritSwap’s treasury, leaving it “without the means to finance essential aspects of our operation,” which includes operational expenses, salaries, and marketing efforts. The team mentioned that they are seeking “a team to take over” the DEX by September 1. If no transfer of ownership occurs by that date, the DEX will shut down entirely.
Established in 2021, SpiritSwap had been among the prominent DEXs on Fantom prior to the onset of the cryptocurrency bear market. Its total value locked (TVL) peaked at $374 million in January 2022 but has since declined to $2.92 million at the time of this report, further impacted by the Multichain incident.
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After months of speculation, Multichain developers revealed that co-founder and CEO Zhanojung He was apprehended by Chinese authorities in May on undisclosed charges. He reportedly had sole access to Multichain’s private keys and servers at the time of his arrest. Despite the lack of details regarding his detention, funds belonging to Multichain and its users have been converted into stablecoins and private coins and moved out of the protocol. Some affected users have since claimed that the Chinese authorities are involved in a complex embezzlement scheme concerning users’ funds.
Before the incident, Multichain was the preferred cross-chain protocol for Fantom. A combination of seized assets and capital outflow led to a decline in Fantom’s TVL from $364 million in early May to $72 million at the time of this report. Previously, Fantom’s lending protocol Geist Finance announced its intention to shut down due to its exposure to Multichain.
End of an era as @Spirit_Swap calls it quits; the very first place I landed on #Fantom 828 days ago
They’re looking for a team to hand things to; otherwise operations will cease on September 1; a guide to help users withdraw $SPIRIT dregs as they unlock will be developed pic.twitter.com/Syu2wqNlAY— The Fantom Ecologist (@ftm_ecologist) August 9, 2023
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