Wonderland’s TIME tokens fell 32% in European hours after blockchain sleuths revealed ‘Sifu,’ a core member of the founding team, was previously involved in what is alleged to have been 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 referring to themselves as the “Frog Nation.” The protocol locked up billions of dollars of investor funds at its peak, but confidence was rattled among investors this morning.
“0xSifu is the Co-founder of QuadrigaCX, Michael Patryn,” tweeted Zach, a pseudonymous Twitter account with a track record of unmasking crypto scams and nefarious behavior. “If you are unfamiliar that is the Canadian exchange that collapsed in 2019 after the founder Gerald Cotten disappeared with $169m.”
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.eth (@zachxbt) January 27, 2022
Wonderland founder Daniele Sestagalli confirmed the allegations in a later tweet, saying he was aware of Sifu’s identity and connections to QuadrigaCX: “I want everyone to know that I was aware of this and decided that the past of an individual doesn’t determine their future,” Sestagalli tweeted. He further confirmed Sifu’s identity in a post on Thursday morning.
— Joe Weisenthal (@TheStalwart) January 27, 2022
The community wasn’t impressed by Sestagalli’s response.
“In 2005, he pled guilty to credit and bank fraud. In 2007, he admitted burglary, theft, and computer fraud. In 2018, he and his partner “lost access” to $115M in customer funds,” said Inverse Finance founder Nour Haridy in a response to Sestagalli’s tweet. “I agree that inmates deserve second chances but this is NOT about being convicted.”
Crypto exchange QuadrigaCX 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, following which over $190 million worth of cryptocurrency owed to 115,000 customers was deemed missing, as per 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 worth of client funds. Crypto circles were quick to term the entire incident as an exit scam – a term for alleged fraudsters stealing investor funds after building up confidence.
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 post that Wonderland funds were secured by a wallet that required multiple signatures to access, downplaying concerns among investors. “All funds in wonderland are managed by a multi-sign, any fud related to that needs to be cut off now, as they are secured by me and the wonderland team,” he wrote in his post.
Sentiment on Crypto Twitter remained tainted, however.
UPDATE (Jan. 27, 12:05 UTC): Adds “alleged” to headline.
UPDATE (Jan. 27, 12:09 UTC): Adds tweet including excerpt from Sestagalli post.