A lending protocol operating on the Fantom network, Geist Finance, has announced its permanent shutdown following significant losses caused by the Multichain exploit.
The app’s development team took to social media on July 14 to confirm that Geist would not resume lending and borrowing activities. The protocol experienced a pause in its contracts on July 6, followed by a partial resumption limited to “withdraw and repay only” mode on July 9.
Geist Finance had locked more than $29 million worth of crypto assets in its contracts before the hack occurred. The lending platform allowed users to borrow, lend, and use bridged tokens from the Multichain platform as collateral.
The recent social media post from the Geist Finance team cited unreliable information from the oracles as the primary reason for the protocol’s closure. The oracles began listing values for the non-bridged, or “real,” versions of each coin, which were significantly higher than their Multichain derivatives.
This discrepancy rendered reopening lending operations impossible, as it would result in bad debt for holders of non-Multichain coins such as Magic Internet Money (MIM) or Fantom.
It’s worth noting that the Geist Finance team did not blame Chainlink oracles for the protocol’s demise, acknowledging that they had functioned correctly.
The Multichain hack, initially reported by blockchain analytics experts on July 7, involved the withdrawal of over $100 million from Multichain bridges, including those associated with Dogechain, Fantom, and Moonriver.
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Further investigations revealed that an unknown individual had exploited a fee-based vulnerability to drain funds from the protocol and transfer them to fresh wallet addresses.
Regarding this fee-based attack that occurred on July 11, it was a counter-exploit initiated by the CEO’s sister at the Multichain team’s request, aimed at recovering funds. However, the sister was also apprehended, and the status of the assets she managed to retrieve remains uncertain.
