The Wonderland protocol became the talk of the decentralized finance (DeFi) world after the platform was found at the center of a brewing controversy.
The Wonderland protocol became the talk of the decentralized finance (DeFi) world after the platform was found at the center of a brewing controversy.
On Jan. 27, DeFi analyst zachxbt revealed that one of the anonymous co-founders of Wonderland happened to be QuadrigaCX co-founder Michael Patryn, who has been operating under the name of Sifu.
QuadrigaCX is a defunct crypto exchange from Canada which closed when Gerald Cotten, the exchange founder and sole person with knowledge of the exchange’s wallet keys, passed away. Following his death, $169 million worth of user funds were irreversibly lost.
Cotten’s passing led to a wave of litigation as former exchange users sought to recover their funds. Others in the crypto community claimed that Cotten faked his death to get away with the allegedly stolen crypto.
Who is Sifu?
Zachxbt claimed in a series of tweets that Patryn has been a serial offender of the law and prior to his stint at QuadrigaCX, he helped run an identity theft ring called shadowcrew, to which he later plead guilty.
According to a Bloomberg report citing California court records, Michael Patryn is Omar Dhanani, who was sentenced to 18 months in federal prison for running a credit card fraud ring and admitted burglary, grand larceny and computer fraud in three separate criminal cases.
The DeFi analyst questioned Wonderland founder Daniele Sestagalli’s motive to work with a convicted scammer and give him responsibility for a billion-dollar treasury comprising investors’ money.
1/ This needs to be shared @0xSifu is the Co-founder of QuadrigaCX, Michael Patryn. If you are unfamiliar that is the Canadian exchange that collapsed in 2019 after the founder Gerald Cotten disappeared with $169m
I have confirmed this with Daniele over messages. pic.twitter.com/qSfWNnQPhr
— zachxbt (@zachxbt) January 27, 2022
After the true identity of the anonymous chief financial officer was revealed, Sestagalli came out with his side of the story. He claimed that he was aware of Sifu’s true identity almost a month prior but didn’t judge him for his past. But, Sestagalli’s clarification seemed too little too late, and after community backlash, Wonderland decided to put Sifu’s removal to a community vote, which was passed with an overwhelming majority.
After the removal of the treasury manager, Sestagalli decided to hand over the treasury to the community and wind down the project. The proposal received a divided vote with 55% voting against it and 45% voting in favor. Regardless, the founder decided to pull the plug on the project until a better solution comes up.
Immediately following his dismissal from Wonderland, Sifu sent out 3,000 Ether (ETH) to a coin mixer called Tornado Cash in three different batches. While he claimed that it was his own money, community members were skeptical. One user pointed out that a wallet associated with Sifu received nearly $400 million in funds in just a month and right after his doxing, $200 million was moved away from the wallet.
Around 200 million was just transferred from this wallet after this tweet. It’s value is now ~235M USD. Holy shet.
— Zappyboi (@Zappyb0i) January 27, 2022
Sestagalli believes the community is strong and the project can move forward. In his last tweet addressing the issue, he said:
“I am working more closely with our Wonderland and WAGMI community moderators and supporters to ensure a better top-down level of communication and infos. We will continue building together as a community and get out of the FUD together. SoonTM next proposal ;).”
In the original winddown proposal, Sestagalli has included a deadline of five days to propose a new pathway if the current proposal is voted down:
“If the proposal is voted against, and no counter proposal within 5 days is made by the community with relevant people who are willing to take over the multisig and willing to take on this challenge, we will still unwind the treasury.”
Among numerous proposals put forward by the community, one from dcfgod has caught the crypto community’s eye. The proposal demanded a rage quit process that would halt all trading and remove all liquidity to start from scratch, involving only those who wanted to be associated with the project.
Another notable proposal would return investors’ original investment and allow Skyhopper, a crypto trader, to manage and advise the Wonderland treasury. However, there hasn’t been any final decision on which proposal would be accepted and put forward.
So, what went wrong?
To begin with, Wonderland’s decentralized autonomous organization (DAO) wasn’t as decentralized as many would have believed.
A DAO is an autonomous organization run through software and smart contracts and community voting, allowing them to operate without being led by a central party.
While, ideally, a DAO should be free from individual or organizational control, the case of…
cointelegraph.com