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Cryptocurrency centralized exchange Gate.io has threatened legal action in response to rumors of imminent bankruptcy. Members of the cryptocurrency community have been speculating since May about a possible connection between Gate.io and the troubled Multichain internet protocol.
“People who cause panic among investors with just rumors and gossip, without reliance on any specific source, will be prosecuted,” a June 4 Twitter post, originally written in Turkish, said.
Tüm kullanıcılarımızın bilgisine arz ederiz.
Sahte ve gerçeklik payı olmayan soylentilere lütfen itibar etmeyiniz. pic.twitter.com/6SpuKx0rU8
— Gate.io (@gate_io) June 4, 2023
The insolvency rumors of Gate.io emerged after a series of events related to Multichain. The cross-chain protocol has been experiencing technical difficulties since May 24, when the node delays transactions. A few days later, the Multichain team reported that they were unable to contact their CEO to access the servers and resolve the issue, fueling previous rumors that the protocol leadership had been seized and Chinese authorities had confiscated smart contract funds worth more than 1 .5 billion dollars.
Data from Blockchain analytics company Arkham Intelligence for May 24 showed a large influx of Multichain tokens (MULTI) from the Gate.io platform.
Gate.io first denied liquidity issues on May 31, saying its operations are “working fine” and that withdrawals are not an issue. Although the Twitter and Telegram channels have been inundated with reports of traders withdrawing funds, trading volume on the exchange has remained relatively stable in recent days.
At the time of writing, its native GateToken (GT) token is trading at $4.29, down 9.6% from the past seven days, data from CoinGecko shows. First founded in 2013 in the Cayman Islands, the exchange has recently expanded to Hong Kong, Turkey and Dubai.
The current issues of Multichain have prompted other cryptocurrency exchanges to take action. On May 25, Binance suspended deposits for 10 intermediate tokens on the BNB Smart Chain, Fantom, Ethereum, and Avalanche blockchain networks. Transaction downtime also caused the Fantom Foundation to remove 449,740 MULTI ($2.4 million) from liquidity on decentralized exchange SushiSwap.