A New York judge on Thursday temporarily extended a freeze on wallets containing about $63 million in stolen USDC stablecoins, backing a request from the Singapore liquidators of collapsed crypto bridge Multichain as they seek U.S. recognition of the case.
Judge David S. Jones ordered Circle to keep three Ethereum wallets frozen and preserve dollar reserves backing stolen USDC.
The order would “avoid potential immediate and irreparable harm” if the state court lifted Circle’s freeze and allowed the assets to flow or be claimed outside, the liquidators warned.
It also pauses a class action in which a group of American investors sought control of the same $63 million through litigation against Circle.
This case was transferred 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 involving various parties to be heard in federal court.
The order remains provisional under Article 1519 of the United States Bankruptcy Code, which allows courts to grant temporary relief when urgent action is necessary to protect assets before a foreign matter is formally recognized.
In this case, the court would consider whether the Singapore liquidation can be considered a “foreign main proceeding” under Chapter 15, which governs cross-border insolvency cooperation.
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If recognized, this would authorize Singapore liquidators to act in the United States to locate, preserve and recover Multichain’s assets under coordinated court supervision.
Decrypt has contacted Circle, Joel H. Levitin, Multichain’s lawyer and Multichain’s three liquidators at KPMG Singapore for comment.
Multichain, formerly known as Anyswap, was one of crypto’s largest cross-chain asset bridges, connecting networks like Binance Chain, Avalanche, Polygon, and Ethereum.
A cross-chain asset bridge works by locking tokens on one chain and issuing equivalent tokens on another, allowing users to move assets between otherwise distinct networks without selling or converting them.
$78 million lost due to ‘laundering loophole’ in Tether freezing method since 2017
At its peak, the bridge had a total locked-in value of around $9.2 billion at the start of 2022, according to data on DefiLlama.
His troubles began in May 2023 when transactions started to freeze and reports surfaced that CEO Zhaojun had been arrested and detained in China.
By July of the same year, more than $125 million in assets were moved of Multichain’s wallets in what the team described as “abnormal” transfers to unknown addresses, causing an immediate shutdown of its bridge operations.
