Gate.io, a centralized cryptocurrency exchange, has warned of legal repercussions in response to rumors of impending bankruptcy. Since May, members of the crypto community have been conjecturing about a possible association between Gate.io and the struggling cross-chain protocol Multichain.
In a Twitter announcement made on June 4th, originally written in Turkish, it was stated that legal action will be taken against individuals who incite investor panic solely through rumors and hearsay, without any credible sources to support their claims.
A Twitter announcement made on June 4th, originally written in Turkish, states that individuals who spread panic amongst investors through rumors and gossip without any concrete sources will face legal action.
Gate.io’s insolvency rumor emerged after a sequence of events that involved Multichain. Since May 24th, the cross-chain protocol has been grappling with technical issues that delayed transactions due to a node problem. A few days later, Multichain’s team revealed that they were unable to reach their CEO to access the servers and resolve the issue, which further fueled previous rumors that the leadership of the protocol had been detained and over $1.5 billion in smart contract funds had been seized by the Chinese authorities.
On May 24th, Blockchain analytics company Arkham Intelligence reported significant inflows of Multichain tokens (MULTI) from Gate.io’s platform.
On May 31st, Gate.io initially refuted any claims of liquidity problems, asserting that their operations were functioning efficiently and that withdrawals were not a concern. Despite reports of traders withdrawing funds flooding Twitter and Telegram channels, the exchange’s trading volume seems to have remained relatively stable in recent days.
As per CoinGecko’s data, GateToken (GT), the exchange’s native token, is currently trading at $4.29, reflecting a decline of 9.6% over the past seven days. Established initially in 2013 in the Cayman Islands, the exchange has lately expanded its operations to Hong Kong, Turkey, and Dubai.
Multichain’s persistent problems have compelled other cryptocurrency exchanges to respond. On May 25th, Binance suspended deposits for ten bridged tokens on the BNB Smart Chain, Fantom, Ethereum, and Avalanche blockchain networks. The transaction downtime also led the Fantom Foundation to withdraw 449,740 MULTI ($2.4 million) from liquidity on the decentralized exchange SushiSwap.
