Gate.io may take legal action due to rumors regarding its financial instability.
The full-service digital asset exchange Gate.io has stated that it will take legal action against those who spread rumors about its bankruptcy since May. The exchange has reportedly faced serious solvency issues due to its connection with the cross-chain protocol Multichain and its MULTI token.
The exchange tweeted:
“Legal proceedings will be initiated against people who cause panic among investors only with rumors and gossip, without relying on any concrete source.”
Earlier, the exchange also clarified that there were no issues with its operations or withdrawals as rumored. However, multiple sources claimed that Gate.io was facing financial difficulties and had trouble processing withdrawals due to its connection with the troubled Multichain protocol.
Reportedly, Multichain has transferred $3 million worth of MULTI tokens to Gate.io. Other transactions between Gate.io and Multichain-related tokens have also taken place, some of which were later halted for deposit on the Binance exchange.
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As a result of these speculations, a large amount of money has been leaving Gate.io. Its GT token has suffered a significant price drop, with $148 million leaving the platform in a single day last week. As of now, the GT price is $4.21, with a 24-hour trading volume of $902,639. This represents a 4.24% price decline in the last 24 hours and a 13.35% price decline in the past seven days. The current GT price is as much as 67.47% lower than its all-time high level.
What Happened to Multichain?
The first news about MULTI tokens being moved appeared on May 24, when blockchain analytics startup Arkham Intelligence released data showing enormous inflows of MULTI to Gate.io.
On May 25, Binance halted the deposit of tokens bridged by Multichain, including bridged versions of Polkastarter ( POLS ), Alpaca Finance ( ALPACA ), Fantom ( FTM ), Alchemy ( ACH ), Beefy ( BIFI ), SuperVerse ( SUPER ), and more. Binance stated that the mentioned tokens were experiencing delayed transactions, and the exchange started seeking clarity from Multichain.
We’ll be temporarily suspending deposits for the following bridged tokens-network while we await clarity from the Multichain team.
POLS-BSC ACH-BSC BIFI-FTM SUPER-BSC AVA-ETH SPELL-AVAXC ALPACA-FTM FTM-ETH FARM-BSC DEXE-BSC
Deposits of the above assets on other networks are…
— Binance (@binance) May 25, 2023
On May 31, Multichain announced that its CEO Zhaojun was missing. At that time, reports about his arrest in Shanghai appeared. Multichain noted that a few of its routers no longer worked since it was only Zhaojun who had access to particular servers.
During these events, the Multichain token has dropped by more than 50% within less than a week, reaching record lows. As of now, it is trading at $3.56. In the last seven days, MULTI has lost 25.3%. With a circulating supply of 19 million MULTI tokens, Multichain is valued at a market cap of $68,273,263.