New York Court Extends Asset Freeze to Aid Singapore’s Multichain Liquidation

A New York judge temporarily extended a freeze on wallets containing about $63 million in stolen USDC stablecoins on Thursday, upholding a request by Singaporean liquidators of collapsed crypto bridge Multichain as they seek US recognition of the case.

Judge David S. Jones ordered Circle to keep three Ethereum wallets frozen and to preserve the dollar reserves backing the stolen USDC.

The order would help “avoid potential immediate and irreparable harm” if the state court lifted Circle’s freeze and let the assets move or be claimed outside, the liquidators warned.

It also stops a separate break class action in which a group of American investors had sought control of the same $63 million through litigation against Circle.

That case was moved from New York state court to the Southern District of New York last Friday after Circle invoked the Class Action Fairness Act, which allows large class actions with different parties to be heard in federal court.

The order remains provisional below Section 1519 of the US Bankruptcy Code, which allows courts to grant temporary relief when urgent action is needed to protect assets before a foreign case is formally recognized.

In this case, the court will review whether the Singapore liquidation qualifies as a “foreign main proceeding” in Chapter 15, which governs cross-border cooperation in insolvency.

If recognized, it would authorize Singapore’s liquidators to act in the United States to locate, preserve and recover Multichain’s assets under the supervision of the coordinated court.

Decrypt reached out to Circle for comment, Joel H. Levitin, Multichain’s attorney, and the three Multichain liquidators at KPMG Singapore.

Multichain, formerly known as Anyswap, was one of the largest cross-chain crypto asset bridges, joining networks such as Binance Chain, Avalanche, Polygon, and Ethereum.

A cross-chain asset bridge works by locking tokens in one chain and issuing equivalent tokens in another, allowing users to move assets between otherwise separate networks without selling or converting.

At its height, the bridge had a total closing value of about $9.2 billion by early 2022, according to data on DefiLlama.

His problems began in May 2023 when transactions began to freeze and reports emerged that CEO Zhaojun had been arrested and arrested in China.

In July of the same year, more than $ 125 million in assets were moved from Multichain wallets in what the team described as “abnormal” transfers to unknown addresses, prompting an immediate shutdown of their bridge operations.