New York Freezes $63M in Multichain USDC as Singapore Liquidation Proceeds
A Federal court in New York has just solidified a freeze on 63 million in USDC stablecoins that are tied to Multichain...
Quick overview
- A Federal court in New York has frozen $63 million in USDC stablecoins linked to the collapsed cross-chain bridge Multichain.
- The ruling, made under Section 1519 of the US Bankruptcy Code, aims to protect the assets while reviewing the Singapore liquidation case.
- The order also pauses a class action from US investors seeking control of the same funds, highlighting jurisdictional complexities.
- Multichain, once valued at $9.2 billion, faced a rapid downfall due to operational issues and investigations following abnormal transactions.
A Federal court in New York has just solidified a freeze on 63 million in USDC stablecoins that are tied to Multichain, the not-so-lucky cross-chain bridge that went under. This decision came after a request from the liquidators in Singapore – an interesting sign of things to come as far as cooperation between the US and Singaporean authorities is concerned – as they try to recover assets in what is already one of the biggest cross-border insolvency cases the crypto industry has ever seen.
District Court Judge David S. Jones of New York’s Southern District ordered Circle, the company behind the USDC stablecoin, to keep those three Ethereum wallets on ice and ensure the matching dollar reserves are safe as well. That ruling – made under a section 1519 of the US Bankruptcy Code – effectively gives the court a provisional green light to make a move to prevent some really serious damage if those assets were to get let loose.
Key details of the ruling include:
- Assets involved: $63 million in USDC stablecoins.
- Court authority: Section 1519, Chapter 15 provisional relief.
- Parties involved: Circle, KPMG Singapore, and Multichain’s liquidators.
The order temporarily halts any competing claims to the frozen assets while the US court reviews whether Singapore’s liquidation qualifies as a “foreign main proceeding” under Chapter 15, which governs cross-border insolvency cooperation.
Class Action Paused Amid Jurisdiction Review
The New York order also pauses a separate class action filed by US investors seeking control of the same frozen funds. That case was recently transferred from state court to the federal Southern District of New York, after Circle invoked the Class Action Fairness Act, which allows multi-jurisdictional disputes involving large classes to be heard in federal court.
Suppose Singapore manages to get its liquidation case up to Chapter 15 standards. In that case, it’ll mean that those liquidators will be officially permitted to go after Multichans assets worldwide under court supervision. Whether or not this ultimately works out is still to be seen – but one thing is for sure: this decision will be a major test of how well the two countries can work together on this case – or if they can at all – and prevent any potential asset hijinks or outright scams.
Decrypt reached out to Circle, Joel H. Levitin, Multichain’s US attorney, and the KPMG Singapore liquidators, though none had commented at the time of writing.
Multichain’s Fall from $9.2B to Collapse
Once a major cross-chain bridge connecting Binance Chain, Avalanche, Polygon, and Ethereum, Multichain (formerly Anyswap) allowed users to move tokens across blockchains by locking assets on one network and issuing equivalents on another.
At its 2022 peak, Multichain held $9.2 billion in total value locked, according to DeFiLlama. But the platform’s operations unraveled in May 2023, when transactions began freezing amid reports that CEO Zhaojun was detained in China.
By July 2023, roughly $125 million in assets were transferred from Multichain’s wallets to unknown addresses—what the company later called “abnormal transactions.” The incident forced a complete shutdown, triggering investigations across multiple jurisdictions and now, a high-profile US-Singapore legal collaboration to recover remaining funds.
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