Multichain Hack Led To The Smartest Arbitrage In Crypto History

  • The recent Multichain hack caused price fluctuations on the Fantom blockchain.
  • The price differences led to what some have called the smartest arb in crypto history.
  • Opportunistic traders reportedly bought USDC at a 50% discount and offloaded it for a profit on other chains.

The suspicious outflow of funds from cross-chain router protocol Multichain earlier this month triggered a domino effect that involved the devaluation of crypto assets on the Fantom blockchain, which relied on Multichain for maintaining accurate trading prices in its ecosystem. 

The devaluation led to differences in prices of the same crypto assets on different chains, which paved the way for what experts described as the smartest arbitrage in crypto history. Arbitrage refers to a type of trading that takes advantage of the fluctuation in the price of assets in different markets. This allows traders to profit from the minor difference in prices of the same asset across several marketplaces. 

Crypto journalist Wu Blockchain took to Twitter earlier today to highlight one such arbitrage associated with the price difference induced by Multichain’s recent issues. Following the outflow of over $125 million from Multichain, the crypto assets on Fantom got devalued. Among the devalued assets was USD Coin (USDC) which was trading at as low as $0.50 at the time. 

USDC, which is supposed to be pegged to the US Dollar, was de-pegged on Fantom. An opportunistic trader whose address begins with 0xfad7 began transferring Fantom’s native token FTM from centralized crypto exchanges to the Fantom network. 

These tokens were then used to purchase USDC at a 50% discount, which was sent to an online casino that accepted crypto stablecoin deposits. The trader repeated this process several times, which ironically pumped USDC’s price up to $0.90, just 10 cents away from its dollar peg. 

BC Game, the online casino where the discounted USDC was deposited, credited the corresponding amount into the trader’s casino account, without realizing the origin of the stablecoins. The stablecoins were then redeemed for their full $1 value, netting the trader several hundred thousand dollars. The arbitrage was described as the “smartest arb in crypto history” by Jeff Dorman, who serves as trading outfit Arca’s chief investment officer.

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