Wonderland’s TIME tokens fell 32% in European hours after blockchain detectives revealed that ‘Sifu,’ a key member of the founding team, had previously been involved in what was supposed to be one of the crypto industry’s biggest exit scams.
Avalanche-based Wonderland has been among the most popular crypto protocols in recent months, with community members calling themselves the “Frog Nation.” The protocol locked billions of dollars of investment funds at its peak, but confidence was soaked among investors this morning.
“0xSifu is the co-founder of QuadrigaCX, Michael Patryn,” tweeted Zach, a pseudonymous Twitter account with a record of unmasking cryptic fraud and misconduct. “If you don’t know, this is the Canadian exchange that collapsed in 2019 after founder Gerald Cotten disappeared with $ 169 million.”
1 / This must be shared @ 0xSifu is the co-founder of QuadrigaCX, Michael Patryn. If you don’t know, this is the Canadian exchange that collapsed in 2019 after founder Gerald Cotten disappeared with $ 169 million.
I confirmed this with Daniele in messages. pic.twitter.com/qSfWNnQPhr
– zachxbt.eth (@zachxbt) January 27, 2022
Wonderland founder Daniele Sestagalli confirmed the allegations in a then tweet, saying he was aware of Sifu’s identity and ties to QuadrigaCX: “I want everyone to know that I was aware of this and decided that an individual’s past does not determine their future,” Sestagalli tweeted. He further confirmed Sifu’s identity in a post Thursday morning.
– Joe Weisenthal (@TheStalwart) January 27, 2022
The community was not impressed by Sestagalli’s response.
“In 2005, he pleaded guilty to credit and bank fraud. In 2007, he pleaded guilty to burglary, theft, and computer fraud. In 2018, he and his partner” lost access “to $ 115M in client funds,” said Inverse Finance founder Nour. Haridy in response to Sestagalli’s tweet. “I agree that prisoners deserve a second chance, but this is NOT about being convicted.”
QuadrigaCX crypto exchange was founded by Gerald Cotten and Patryn in 2013, quickly becoming one of the largest crypto exchanges by trading volumes in Canada. Cotten died in December 2018 after a trip to India, after which more than $ 190 million in cryptocurrency owed to 115,000 customers was considered missing, according to reports.
Where the funds went remains a mystery, as QuadrigaCX executives claimed that only Cotten had access to the private keys that held the millions of dollars of client funds. Cryptographic circles quickly called the whole incident an exit fraud – a term for alleged fraudsters who steal investment funds after building trust.
Patryn has remained under the radar ever since, until today, when he was revealed to be one of the architects behind Wonderland.
Sestagalli said in the poster that Wonderland funds were secured by a wallet that required several signatures to access, reducing concerns among investors. “All the funds in Wonderland are managed by a multi-sign, any fud related to that must be cut off now, because they are secured by me and the team of the wonder,” he wrote in his post.
I feel on Crypto Twitter remained stained, however.
UPDATE (Jan. 27, 12:05 UTC): Adds “supposedly” to title.
UPDATE (Jan. 27, 12:09 UTC): Adds a tweet including an excerpt of Sestagalli post.