Fantom Foundation's Legal Win: A Precedent for Crypto Security?
- The High Court of Singapore has ruled in favor of the Fantom Foundation, mandating compensation for cybersecurity breach losses.
- The ruling may set a new legal standard for security breaches in the cryptocurrency industry.
- The Fantom Foundation's token value saw a slight increase following the court's decision.
Fantom Foundation's Courtroom Success Story
Singapore's High Court has mandated that the Multichain Foundation, known for its cross-chain routing services, reimburse the Fantom Foundation, a primary layer blockchain entity, for significant financial damages stemming from a cybersecurity breach.
Fantom Foundation shared the update on judgment over X.
Source: X
In the midst of 2023, Multichain Foundation experienced unexpected and substantial asset transfers, which were later identified as a security breach. This incident triggered a domino effect, impacting affiliated protocols and resulting in a staggering collective loss exceeding $210 Million across various blockchain networks such as Fantom, Ethereum, BNB Chain, Cronos, Polygon, Arbitrum, zkSync, Optimism, and Moonbeam.
Consequently, the Fantom Foundation presented its monetary damages to the High Court in Singapore, requesting restitution for the financial setback. The court concluded that Multichain Foundation acknowledged the breach and the consequent violation of their user agreement.
As a resolution, on July 8, the court ruled in favor of Fantom, granting them compensation of $2.187 Million for the losses incurred during the security breach. It's worth noting that Fantom had initially reported its ecosystem's losses to be roughly a third of the total $210 Million lost in the hack.
Multichain Foundation Case: Hack or Rug Pull?
On July 6, 2023, Multichain was subjected to unauthorized and substantial outflows of funds, indicating a security compromise or potential internal misconduct.
According to Chainalysis, this incident is considered one of the most significant cryptocurrency heists to date, with losses surpassing $125 Million.
The incident saw an emigration of assets of over $120 Million from Multichain's Fantom bridge, and include assets like wrapped Ether (wETH), wrapped Bitcoin (wBTC), and USDC. However, it is not yet clear whether the incident was a hack or a rug pull.
On July 8, Singapore's High Court concluded by ordering Multichain Foundation to pay $2.187 Million. After the high court's judgment, the market has responded with cautious optimism, reflected in the slight uptick of the Fantom (FTM) token's value, which spiked to $0.4521 on July 8, before dropping to $0.4261.
Source: CoinMarketCap
At press time, the FTM token was hovering at $0.4434, a change of 0.22% in a day with $1,241,243,171 in market cap and $115,255,569 in 24-hour volume.
Fantom Foundation, a Layer 1 project that uses a single consensus layer to support the creation of multiple execution chains was founded in 2018. Its token is used for payments, governance, and ongoing block rewards sent to validators and delegators who stake the respective token.
Conclusion
The High Court of Singapore's decision to hold the Multichain Foundation accountable for the losses sustained by the Fantom Foundation marks a significant moment in the crypto industry's ongoing struggle with security breaches. The ruling not only underscores the legal responsibilities of blockchain entities but also highlights the potential repercussions of such incidents on the broader ecosystem.
