In brief
- The New York court issued a provisional order under Section 1519 directing Circle to maintain the freeze on three Ethereum wallets.
- A related class action by U.S. investors seeking the same funds has been paused pending the Chapter 15 review.
- The case will determine whether Singapore’s liquidation of Multichain qualifies for formal recognition in the U.S.
A New York judge temporarily extended a freeze on wallets holding roughly $63 million in stolen USDC stablecoins on Thursday, backing a request from 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 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, liquidators warned.
It also pauses a separate class action in which a group of U.S. investors had been seeking 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 diverse parties to be heard in federal court.
The order remains provisional under Section 1519 of the U.S. 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 would review whether the Singapore liquidation qualifies as a “foreign main proceeding” under Chapter 15, which governs cross-border cooperation in insolvency.
If recognized, it would authorize the Singapore liquidators to act in the U.S. to locate, preserve, and recover Multichain’s assets under coordinated court supervision.
Decrypt has reached out for comment to Circle, Joel H. Levitin, the attorney for Multichain, and the three Multichain liquidators at KPMG Singapore.
Multichain, formerly known as Anyswap, was one of crypto’s biggest cross-chain asset bridges, linking networks like Binance Chain, Avalanche, Polygon, and Ethereum.
A cross-chain asset bridge works by locking tokens on one chain and issuing equivalent tokens in another, allowing users to move assets between otherwise separate networks without selling or converting them.
At its height, the bridge had a total value locked of roughly $9.2 billion in early 2022, according to data on DefiLlama.
Its troubles began in May 2023 when transactions started freezing 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 from Multichain’s wallets in what the team described as “abnormal” transfers to unknown addresses, prompting an immediate shutdown of its bridge operations.