Gate.io denies insolvency claims amid suspicion of exposure to Multichain

Gate.io, a renowned centralized exchange (CEX), has denied speculation of illiquidity in a May 31 blog, saying that there were no issues with the platform's operations or withdrawals. The clarification follows chatter across Crypto Twitter alleging that the exchange was experiencing insolvency because of a supposed association with Multichain (MULTI), a cross-chain router protocol.

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Gate.io denies liquidity problems  

Gate.io centralized exchange's team has assured of the company's "operations running healthy," adding that it was underway with plans to set up a partner-trading platform in Hong Kong, dubbed Gate.HK.

Recently, there have been rumors circulating regarding Gate.io. We would like to clarify that our operations are running healthily, withdrawals are functioning properly, and there are no issues with our operations or withdrawals, as rumored. The Gate.io team is currently focusing on our 10th-anniversary celebration and the launch of Gate Group's Hong Kong trading platform, Gate.HK.

As is the norm among exchanges since the FTX debacle in November, Gate.io reminded users of being the first exchange to provide a 100% proof-of-reserve (PoR). Notwithstanding, speculation of the exchange's insolvency began after several events about the Multichain protocol.

Gate.io and Multichain, how Crypto Twitter linked the two

Gate.io's alleged relationship with Multichain finds context in a May 24 post from blockchain analytics Arkham Intelligence, showing large inflows of MULTI to Gate.io. At the time, Arkham highlighted the transactions related to whispers of Multichain protocol's team "allegedly being arrested in Shanghai, China."

Building on the same context, Binance exchange halted deposits for multiple bridged tokens on May 25, with a specific focus on the ones reliant on the Multichain protocol. These include Polkastarter (POLS), Alpaca Finance (ALPACA), and Fantom (FTM). The suspension was attributed to the said tokens experiencing delayed transactions, according to Binance, which sought clarity from Multichain after the pause.

Further, in a May 31 post, Multichain indicated that its CEO, Zhaojun, was missing, adding that some of the protocol's routers could no longer work because only the CEO had access to the concerned servers.

Crypto Twitter posted images of transactions the same day, showing large FTM deposits from Multichain team members to Gate.io.

Citing one post:

Multi/ETH liquidity is being removed by the Fantom Foundation. This verifies the recent rumors of Multichain having a problem.

Based on blockchain data from Etherscan, over $10 million worth of Fantom tokens were moved from an unknown wallet to Gate.io exchange between May 25 and 26.

Having identified a series of MULTI and FTM deposits to Gate.io, Crypto Twitter speculated that the centralized exchange suffered exposure to Multichain. Nevertheless, in the latest report, the Gate.io team has denied the suspicion, articulating that the exchange continues to process all withdrawals while operating normally.