Welcome to the latest edition of Cointelegraph’s decentralized finance newsletter.
It’s been a tumultuous week of doxxing, hacks, bailouts and new highs in the decentralized finance space. Read on to recap the most impactful stories of the last seven days.
This article represents a conspectus of the full email newsletter. For the full edition, sign up via the box below.
Wonderland lost in no mans amid Sifu saga
Following the revelatory identification of previously anonymous QuadrigaCX co-founder Michael Patryn as the founder of DeFi protocol Wonderland — known on social media as @0xSifu — a subsequent community vote decided upon the permanent closure of Wonderland for outstanding security concerns.
The saga commenced when DeFi investigator Zachxbt doxxed Patryn to be Sifu, a figure with a notorious reputation within the digital asset space for alleged fraudulent and illicit activity, most notably regarding the $145-million losses incurred at Canadian-based cryptocurrency exchange QuadrigaCX in December 2018.
Having been made aware of Sifu’s real identity one month prior to this week’s announcement, Daniele Sestagalli, co-founder of Wonderland and stablecoin protocol Abracadabra, posed a crucial question to the community members: “Do we wind down or continue to fight for the aspect of an investment DAO being a revolutionary new organization?” Sestagalli stated his personal preference to be the latter, to fight.
From a technical perspective on Jan. 15, Wonderland recorded a near all-time high of $776.64 million in total value locked, or TVL. However, as a consequence of the exposure, the TVL figure dropped substantially to $78.57 million on Jan. 25, marking an 89.9% demise. At the time of writing, the figure has somewhat recovered to $408.59 million.
In true Web3 style, the decision to “Wind down Wonderland and give the treasury back to its holders” was put to a community snapshot vote. The two-day governance participation resulted in a split decision, an inconclusive majority with 116,000 TIME tokens allocated to the decision of no, and 95,000 to yes.
In response to this, co-founder Sestagalli assessed that “the duty of the team is to enact the will of the token holders. As the vote is so close to 50/50 there is only one path forward, it is to reimburse/unwind,” confirming this in a follow-up tweet.
1/
Wonderland experiment is coming to an end. It is clear from the vote that the community is divided. The core and heart of Wonderland is still the community. If we cannot find agreement on wether to continue or not, it means that we failed.
— Daniele never asks to DM (@danielesesta) January 30, 2022
Discussions within the community are vehemently ongoing in a bid to find an accommodating solution to the Wonderland saga for all involved. Proposals currently at the forefront are a merger with Abracadabra or a transition to a DAO structure with greater transparency.
Wormhole exploited for $321M, parent bails it out
DeFi bridging protocol Wormhole suffered a significant security exploit on its network this week to the tune of 120,000 Wrapped Ether (wETH) tokens, equivalent to $321 million at the time of impact — the second-largest hack in the history of decentralized finance behind Poly Network’s seismic $610-million breach in August 2021.
Wormhole is known within the industry for its cross-chain token bridge service in which users can transfer crypto assets between chains such as Ethereum, Solana and Polygon, among others, without interacting with centralized exchanges.
After analyzing blockchain data, it was uncovered that the attacker minted 120,000 wETH on Solana and then proceeded to redeem 93,750 wETH for Ether (ETH) worth $254 million. The remaining wETH was swapped for Solana (SOL) and USD Coin (USDC) on Solana.
Following on from this, the hacker utilized a portion of the funds on an asset-buying spree that included SportX (SX), Meta Capital (MCAP), Finally Usable Crypto Karma (FUCK), as well as the highly anticipated soon-to-be-released asset, Bored Ape Yacht Club Token (APE).
In response, the Wormhole team pledged to the community that the token supply, in addition to the one-to-one backed asset total, would be fully reinstated and is offering a generous whitehat bug bounty reward to the malicious entity for full recompensation of the funds.
The hack risked serious cascading ramifications for protocols and platforms within the Solana ecosystem that rely on the wETH supply for collateral. If their assets were not backed with wETH, investors would have been unable to utilize the service, perhaps lose confidence, and, therefore, short the asset. Solana fell around 13% in the fallout of the news.
In a fortuitous turn of events, Wormhole’s parent company, Jump Crypto, stepped in to bailout the platform and restore all lost funds, an action confirmed by Wormhole in a tweet.
1/2
All funds have been restored and Wormhole is back up.
We’re deeply grateful for your support and thank you for your patience.
— Wormhole (@wormholecrypto) February 3, 2022
Despite a resolution for the platform’s affected users, concerns still remain as to the whereabouts of the $321 million in lost funds, in addition to the intentions of the hacker within the marketplace.
Ethereum hash rate hits new ATH in PoS transition
Quantitative insights from popular data aggregation site Glassnode this week revealed that the hash rate for Ethereum reached a new all-time high of 1.11 petahash per second (PH/s) on Jan. 28, surpassing the previous figure of 1.08 PH/s established just 15 days prior.
Fluctuations in the hash rate of proof-of-work (PoW) networks such as Bitcoin and Ethereum are prime indications of additional nodes joining the network, scenarios that ultimately result in higher security and more expansive decentralization of the network.
#Ethereum $ETH Mining Difficulty just reached an ATH of 13,119,856,939,346,200
Previous ATH of 13,076,339,792,989,700 was observed on 23 January 2022
— glassnode alerts (@glassnodealerts) February 1, 2022
In December 2021, participants of the Ethereum network implemented the Arrow Glacier upgrade, an initiative designed to delay the activation of a coding mechanism that is set to halt production of mining activities on the network, otherwise known as the “difficulty bomb.”
It is widely expected that Ethereum’s transition to PoS will occur during the latter half of 2022, with Arrow Glacier being the final upgrade, a market sentiment recognized by one of the core developers facilitating the upgrade, Tim Beiko, during a recent commentary.
Token performances
Analytical data reveals that DeFi’s total value locked slightly increased by 8.87% across the week to a figure of $109.92 billion, attempting to recover from the market downturn in recent weeks.
Tezos (XTZ) reported the highest score in the top 100 following its partnership with Manchester United at 31.60%. Maker (MKR) came in second with a respectable 25.54% gain, while Convex Finance (CVX) recorded a 19.46% increase. Curve DAO Token (CRV) and Oasis Network (ROSE) gained 15.29% and 11.79%, respectively.
Interviews, features and other cool stuff
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us again next Friday for more stories, insights and education in this dynamically advancing space.
Last week, 0xSifu, the pseudonymous treasury manager of Wonderland, was outed as a former convict and co-founder of the collapsed QuadrigaCX exchange.
Instead of immediately distancing himself from Patryn, Daniele Sestagalli confessed he already knew about his past and publicly defended him on Twitter.
The same day, screenshots of different private conversations of Sestagalli came out, casting a shadow over his past life.
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Last week, it emerged that Daniele Sestagalli, founder of several popular DeFi protocols and de facto leader of the “Frog Nation,” had been aware that the treasury manager of his Wonderland Money project had patchy—indeed, criminal—history. On close inspection, it would seem that a number of Sestagalli associates have had their share of run-ins with authorities.
An Admission
On Jan. 27, on-chain analyst and self-proclaimed detective operating under the pseudonym zachxbt made a scandalousrevelationon Twitter. In a series of screenshots that purport to show private messages between zachxbt and Daniele Sestagalli—the founder or key public figure behind such DeFi phenomena as Abracadabra Money, Popsicle Finance, and the now deeply-beset Wonderland Money—in which Sestagalli appears to make stunning admission.
“I came across something rather odd about that,” writes zachbxt in the screenshot.
The response, purportedly from Sestagalli, came back: “About dubai?” they write.
“About Sifu,” zachbxt replied, referring to Wonderland’s treasury manager.
“Oh sheet,” Sestagalli appears to reply, “What’s up[?]”
“Well,” writes zachbxt, “he’s the Quadriga guy.”
“Sestagalli” responds: “I cannot confirm,” he writes, before continuing, “But I have thought about this a lot.”
Fast forward to a second screenshot, and the figure zachbxt claims to be Sestagalli seems to all but confirm the suspicion: “yea is a problem in the PR…” they write; “Alex my partner told me.”
Thus it was revealed to the world that the true identity of Wonderland’s pseudonymous treasury manager 0xSifu was in fact Michael Patryn, a serial scammer, former convict, and co-founder of collapsed Canadian cryptocurrency exchangeQuadrigaCX.
Fallout
The revelation shook Wonderland’s otherwise upbeat and vibrant community to its core.
QuadrigaCX made global headlines in late 2018 when its CEO Gerald Cotten allegedly died during a trip in India, leaving roughly $169 million belonging to 115,000 customer cold wallets inaccessible.
Following the incident, the firm’s co-founder Michael Patryn was identified as Omar Dhanani, a serial criminal who spent 18 months in U.S. federal prison on conspiracy to commit credit-and-bank cardfraudin 2005, and burglary, grand larceny, and computer fraud in 2007.
To hide his criminal past, Dhanani changed his name twice; once from Omar Dhanani to Omar Patryn in 2003, and then from Omar Patryn to Michael Patryn in 2008. Following QuadrigaCX’s collapse, Patryn briefly vanished from the crypto scene—only to now make a grand reappearance as 0xSifu, the anonymous manager of Wonderland’s $700 million treasury.
Following the disclosure, Sestagalli published astatementconfirming the allegations. “To summarize what has happened,” he wrote, “word came out that Sifu who has been running the Wonderland Treasury, previously was a co-founder of QuadrigaCX, and has had other occurrences in the past.”
Instead of immediately distancing himself from Patryn, Sestagalli admitted that he had known about his real identity for about a month and deliberately decided against ending the relationship. “I found out about this 1 month ago,” Sestagalli admitted, adding, “I am of the opinion of giving second chances, as I have mentioned on Twitter.”
1/ Today allegations about our team member @0xSifu will circulate. I want everyone to know that I was aware of this and decided that the past of an individual doesn’t determine their future. I choose to value the time we spent together without knowing his past more than anything.
— Daniele never asks to DM (@danielesesta) January 27, 2022
Judging by the comments under Sestagalli’sinitialTwitter thread, this course of action didn’t fare well with the Wonderland community. The news came amid an ongoing PR crisis for the project, whose native rebase token, TIME, was already trading at record lows and below its supposed backing price.
To make things worse, an oldinterviewfrom December 2020 in which Sestagalli briefly discusses the Quadriga incident resurfaced and started circulating on Twitter. In it, Sestagalli jokinglysays: “The Quadriga story will come back guys, I’m telling you. Sooner or later, something will reappear on Quadriga.”
Despite this statement likely being nothing but an unfortunate choice of words and pure coincidence regarding the recent developments, it was enough to trigger an avalanche of rumors and conspiracytheoriesconcerning Sestagali’s true intention.
The TerraBitcoin Club
On the same day that zachxbt revealed 0xSifu’s true identity, Italian investigative journalist Nicola Borzi wrote a Twitter thread and shared several screenshots of what appears to be a discussion concerning the $25 millionPopsicle Finance hackfrom Aug. 4, 2021.
1 – On the night of August 4th 2021 #Popsicle platform said it had been “hacked”. On that occasion, on a secret Telegram chat, #TerraBitcoin, who hids a group of crypto investors, mostly Italians, managed by Paolo #Barrai, there was a dialogue among the investors
— Nicola Borzi (@nicolaborzi) January 27, 2022
According to Borzi, the screenshots originate from a private Telegram channel belonging to an exclusive club for mostly Italian crypto investors calledTerraBitcoin, managed by Paolo Barrai, a man with seemingly deep connections inside the Italian crypto community.
The screenshots show a member using the alias “Merlin” saying:
“Bitfinex was hacked on Aug. 2, 2016. It seemed like the end of the world, but thanks to the hack we became stronger because many intelligent people helped us and became our partners. Paolo was one of them. I met Daniele one year ago, Paolo introduced us. Daniele has great talents, the courage of a lion, and a big heart, I’m sure he will manage to come out of this brutal moment even stronger.”
Clarifying to the group exactly who the person behind the Merlin username was, Barrai is seen saying: “for those who didn’t get it we have with us the friend Giancarlo Devasini.” For the uninitiated, Giancarlo Devasini is the CFO of Bitfinex, once the largest cryptocurrency exchange in the world and currently the issuer of the largest stablecoin on the market, Tether.
Devasini has long been known to adopt the alias “Merlin” or “Merlin the Wizard” in many of his communications—they also serve as his Skype and Telegram handles. Coincidentally, one of Sestagalli’s DeFi projects, Abracadabra Money, makes repeated references to the same mythological wizard throughout their Medium posts and technical documents. The project’s core Twitter account, which is supposedly operatedjointlyby the project’s development team—is dubbed0xMerlin.eth.
To make things even more interesting, on December 8, an infamous Tether and Bitfinex critic going under the username Bitfinex’ed on Twittersharedscreenshots that appear to be from the same chat in TerraBitcoin’s Telegram group. There, Devasini is allegedly seen revealing plans for launching a hybrid stablecoin designed to avoid the risks of holding large sums of USD by the end of the year.
Coincidentally, Sestagalli’s Abracadabra Money project is a more decentralized alternative to Tether, or a lending platform that uses interest-bearing tokens as collateral to mint USD-pegged stablecoins named Magic Internet Money. Bitfinex was also the first centralized cryptocurrency exchange to list MIM as abasecurrency.
Bitfinex’s lack of transparency and legal troubles are no secret. Only last year, the holding company of Bitfinex and Tether, iFinex, reached a settlementagreementwith New York Attorney General Letitia James in which the company was forced to cease operations in New York on the grounds that it had deceived clients by overstating reserves and hiding approximately $850 million in losses.
(Interestingly enough, both QuadrigaCX and Bitfinex used Crypto Capital Corp for their payment processing. Now defunct, Crypto Capital was a shadow bank for crypto companies run by Ivan Manuel Molina Lee. The Polish authoritiesarrestedLee on accusations of money laundering and involvement with an international drug cartel in 2019.)
Paulo Barrai, the financial advisor who allegedly introduced Sestagalli to Devasini, also coincidentally appears to have had troubles with the law. In 2013, he wasfined€70,000 by the Italian securities regulator Consob for breaking investment disclosure obligations.
The network expands from there. Being the founder of TerraBitocoin, the “private and confidential club for free people and investors,” Barrai is also in the business of organizing crypto-focused conferences. In 2019, he organized a cryptoconferencein Lugano with seven speakers, one of them being Zhao Dong, founder of Chinese crypto exchange Renrenbit and a large shareholder in Bitfinex who, in March last year, pleadedguiltyto laundering $480 million for online casinos using cryptocurrency.
Another one of the speakers was Lars Schlichting, CEO ofPoseidon Group, a holding company controllingEidoo, a crypto startup founded by Natale Ferrara. Ferrara, in turn, is a co-founder of the crypto investment companyBlockchain Investwith Paolo Barrai.
Barrai’s Blockchain Invest, coincidentally again, is one of the companies that had invested in Zulu Republic, a failed crypto startup co-founded by Sestagalli back in 2016. Having allegedly known Sestagalli for a while, Barrai also invited him tospeakas an expert on decentralized finance at his 2021 conference in Dubai.
The Camponovo Connection
Daniele Alekos Aldo Sestagalli first showed up in the crypto industry around early 2018 with his Zulu Republic blockchain project. Before becoming Zulu Republic, the firm was called Zulu Mobility Technologies, headquartered in Serafino Balestra 6 in Chiasso, Canton Ticino, Switzerland.
According to theSwiss Central Business Registry, Zulu Mobility Technologies was co-founded by Sestagalli, Oliver Camponovo, and Ibex Capital—an accounting firm then owned by Camponovo. The firm was building a mobile application that was supposed to revolutionize the taxi service in Switzerland, comparable to Uber.
According to a 2017 interview, Sestagalli met and partnered with Camponovo because he was an expert in taxation and venture capital. “I met Stefano Barone [another co-founder of Zulu], an example of a successful entrepreneur capable of carrying out projects to the end, and Oliver, an expert in the world of taxation and venture capital. So we started,” Sestagallitoldthe LiberaTV newspaper.
Coincidentally, around the same time, in 2017, Camponovo wasconvictedin the first instance and sentenced to three years in prison for money laundering, falsification of documents, and violations of the law on foreigners: deceiving the authorities in obtaining residence permits. He was convicted along with Giulio Martino, a high-ranking member of Italy’s most notorious crime family, the ‘Ndrangheta, and the financial broker Franco Longo, dubbed the “mafia’s banker,” and sentenced to five and a half years.
On Jan. 13, 2022, five years after first being convicted, Camponovo was acquitted on the money laundering charges by Italy’s Court of Appeals. The case has beenreturnedto the Criminal Court of the first instance so that Camponovo can be tried again, but only for minor offenses.
Accordingto the federal prosecutor in charge of the case, Camponovo was “the director of the criminal action, which he himself had conceived and implemented, making all his knowledge, knowledge and contacts with Swiss and international banks available to the criminal association.”
As part of the “Renewal” operation, the Swiss authorities confiscated various properties, including an office building on the street Via Giuseppe Motta 10 in Chiasso, owned by Martino (50%), Long0 (40%), and Camponovo (10%). Coincidentally, several crypto firms had their headquarters in the same building, including Natale Ferrara’s Eidoo, Poseidon Group portfolio company Digital Identity, and Cryptolab AG, which owns Paolo Barrai’s crypto consultancy firmBigBit. Camponovo’s company Ibex Capital was also registered in the same building.
Interestingly, Zulu Republic isn’t the only firm that connects Sestagalli to Camponovo. According toBusiness Monitordata, Sestagalli is currently a decision-maker in three companies: Zulu Republic, DAAS, and DZent & Partner. Before moving from Via Serafino Balestra 6 in Chiasso (the same address where Zulu was registered) to Zug, DAASmadeCamponovo’s companyIbex Services SAits “care of” postal recipient.
DZent & Partner, on the other hand, is a firm that has Zulu Republic listed as a partner, Sestagalli as a CEO, and Anatol Lüthi as a Partner and Manager. Coincidentally again, Anatol Lüthi was a former CFO of Zulu Republic, one of the founding board members of Utopia Genesis Foundation, and sits on the board of directors on Ibex Services SA.
Utopia Genesisis a Switzerland-based company working to create a blockchain framework for the music industry. In 2021, Daniele Sestagalli became Utopia’sChief Strategy Officerafter leaving the failed Zulu Republic project. This was, in fact, Sestagalli’s last more “traditional” entrepreneurial endeavor before founding several relatively large protocols in decentralized finance.
The Company You Keep
Daniele Sestagalli built a name for himself in the decentralized finance space by, among other things, propelling a populist, anti-centralization, and anti-venture capital narrative. The Frog Nation’s whole shtick is building DeFi that is anti-VC and “anti suits.” But judging by his past actions, Sestagalli adopted that narrative only recently. He apparently had no problemwearing a suitonly a few years ago while still being Zulu Republic’s CEO.
Furthermore, Sestagalli’s determination to entrust a convicted serial criminal with managing a $700 million treasury—even after finding out his real identity—raised many eyebrows within the community. On Sunday, hecalledfor Wonderland to wind down due to divisions in the community, despite 55% of the TIME token holdersvotingagainst it.
Regardless of what happens to Wonderland, Sestagalli’s reputation has taken a serious hit. His past affiliations with individuals either alleged to have committed or convicted of financial crimes certainly won’t help salvage it.
Disclosure: At the time of writing, the author of this feature held ETH and several other cryptocurrencies.
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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
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Wonderland Treasury Manager Outed as QuadrigaCX Co-Founder
0xSifu, the pseudonymous treasury manager of the troubled Avalanche-based protocol Wonderland Money, has been identified as Michael Patryn, a former convict and co-founder of the collapsed cryptocurrency exchange QuadrigaCX. 0xSifu…
Michael Patryn, the recently-outed former treasury manager of Wonderland Money, has sent 2,100 ETH to Tornado.Cash.
Patryn, known in crypto circles under the pseudonym “0xSifu,” insists that the funds are his own.
Patryn has a known criminal record and was the co-founder of the ill-fated Canadian exchange QuadrigaCX.
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0xSifu, the recently-ousted treasury manager of the decentralized finance protocol Wonderland Money, has sent millions of dollars’ worth of Ethereum to Tornado.Cash, a platform that allows users to obscure the movement of their funds. 0xSifu was recently outed as Michael Patryn, co-founder of the fraudulent Canadian crypto exchange QuadrigaCX.
ETH on the Move
Michael Patryn, better known under the pseudonym 0xSifu, appears to havesent2,100 ETH (worth around $5.85 million) to Tornado.Cash, a privacy protocol that allows users to obscure their Ethereum transactions, over the last 13 hours.
Patryn has responded several times on Twitter to users alleging he was involved in foul play, insisting that the funds were his own.The movement of the funds wasfirst pointed outby PeckShield, a blockchain security company; to this, Patrynreplied, “Amazing. Alerts for my own money.”
Shortly afterward, when a user asked, “Whose money is he moving?” in response to Peckshield’s secondalert, Patrynwrote, “Mine. Apparently you’re going to get alert spammed for a while.”
Responding to Coindesk’sclaimthat he was laundering money, Patrynreplied sarcastically, writing, I guess all transfers to Tornado are considered ‘laundered’ to you.”
When Twitter user 0xTutisuggested to Patryn that the optics of his decision to use of Tornado.Cash were not optimal, Patrynexplainedthat he was doing so because he wanted privacy from the “thousands of randos” tracking his wallet.
Trouble in Wonderland
It has been a difficult week for the Wonderland Money community, but the trouble started before 0xSifu, its former treasury manager, wasrevealedto be Michael Patryn, a convicted fraudster, on Jan. 27.Theday beforeusers had suffered significant liquidations, while the TIME token was off its highs by 95%; the MEMO token, meanwhile, was trading far below its so-called intrinsic value.
The developments came to a head whenDaniele Sestagalli, who it was later revealed knew about Patryn’s past before it was publicly discovered, called for the end of his Wonderland project on Sunday. It appears, though, that due to community support, the project has not met its end just yet. Sestagallipostedtoday that the project would continue thanks to the community voting in favor of it.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Disgraced DeFi Founder Daniele Sestagalli Calls Time on Wonderland
“Wonderland experiment is coming to an end. It is clear from the vote that the community is divided,” Sestagalli wrote. Wonderland Drama Continues Daniele Sestagalli has called time on Wonderland. …
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Michael Patryn, the recently-outed former treasury manager of Wonderland Money, has sent 2,100 ETH to Tornado.Cash.
Patryn, known in crypto circles under the pseudonym “0xSifu,” insists that the funds are his own.
Patryn has a known criminal record and was the co-founder of the ill-fated Canadian exchange QuadrigaCX.
Share this article
URL Copied
0xSifu, the recently-ousted treasury manager of the decentralized finance protocol Wonderland Money, has sent millions of dollars’ worth of Ethereum to Tornado.Cash, a platform that allows users to obscure the movement of their funds. 0xSifu was recently outed as Michael Patryn, co-founder of the fraudulent Canadian crypto exchange QuadrigaCX.
ETH on the Move
Michael Patryn, better known under the pseudonym 0xSifu, appears to havesent2,100 ETH (worth around $5.85 million) to Tornado.Cash, a privacy protocol that allows users to obscure their Ethereum transactions, over the last 13 hours.
Patryn has responded several times on Twitter to users alleging he was involved in foul play, insisting that the funds were his own.The movement of the funds wasfirst pointed outby PeckShield, a blockchain security company; to this, Patrynreplied, “Amazing. Alerts for my own money.”
Shortly afterward, when a user asked, “Whose money is he moving?” in response to Peckshield’s secondalert, Patrynwrote, “Mine. Apparently you’re going to get alert spammed for a while.”
Responding to Coindesk’sclaimthat he was laundering money, Patrynreplied sarcastically, writing, I guess all transfers to Tornado are considered ‘laundered’ to you.”
When Twitter user 0xTutisuggested to Patryn that the optics of his decision to use of Tornado.Cash were not optimal, Patrynexplainedthat he was doing so because he wanted privacy from the “thousands of randos” tracking his wallet.
Trouble in Wonderland
It has been a difficult week for the Wonderland Money community, but the trouble started before 0xSifu, its former treasury manager, wasrevealedto be Michael Patryn, a convicted fraudster, on Jan. 27.Theday beforeusers had suffered significant liquidations, while the TIME token was off its highs by 95%; the MEMO token, meanwhile, was trading far below its so-called intrinsic value.
The developments came to a head whenDaniele Sestagalli, who it was later revealed knew about Patryn’s past before it was publicly discovered, called for the end of his Wonderland project on Sunday. It appears, though, that due to community support, the project has not met its end just yet. Sestagallipostedtoday that the project would continue thanks to the community voting in favor of it.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
Share this article
URL Copied
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Disgraced DeFi Founder Daniele Sestagalli Calls Time on Wonderland
“Wonderland experiment is coming to an end. It is clear from the vote that the community is divided,” Sestagalli wrote. Wonderland Drama Continues Daniele Sestagalli has called time on Wonderland. …
Frogs in Meltdown as Wonderland Turns to Black Forest
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Cryptocurrencies had a volatile week after Bitcoin’s (BTC) sudden crash to $33,000 on Jan. 24. However, the sharp 9% drop fully recovered within 8 hours after BTC price regained the $36,000 support.
On Jan. 26, Bitcoin rallied to $38,960 but it could not sustain the level and corrected by 8.8% in the following 8 hours. When factoring in the recent ups and downs, Bitcoin managed to only gain a meager 1.6% over the past seven days.
Even with the considerable price swings, the aggregate futures contracts liquidations were relatively low. Longs (buyers) had $570 million futures terminated, while shorts (sellers) faced $690 million. Data shows that Bitcoin futures represented 41% of the total $1.25 billion liquidations.
Regulatory winds could be limiting BTC’s price recovery
The total crypto market capitalization presented a modest 1.6% weekly increase, in line with Bitcoin’s performance.
Total crypto market capitalization, USD billion. Source: TradingView
Notice how the Jan. 24 price is forming higher lows and currently shows support at $1.75 trillion. Even with the price being 22% down in 2022, the total crypto market capitalization showed a healthy 12.5% bounce since the Jan. 24 low.
Investors seem to be digesting this week’s regulatory news where United States Congressman Ted Budd submitted an amendment to scrub a bill provision allowing the U.S. Treasury to unilaterally prohibit certain financial transactions without public input.
If passed in its current form, the America COMPETES Act of 2022 would result in a significant blow to the cryptocurrency industry, as Coin Center’s executive director Jerry Brito stated.
Investors were negatively impacted by news that the U.S. White House is reportedly preparing an executive order on crypto to make government agencies conduct risk analysis on cryptocurrency as a national security threat.
Metaverse tokens decoupled after last week’s Apple news
Steady bearish newsflow might have been the cause for cryptocurrencies’ recent price action but there were some stellar performances from Metaverse tokens.
Top weekly winners and losers on Jan. 31. Source: Nomics
Apple (AAPL) CEO, Tim Cook, said in an investors’ call on Jan. 27 that metaverse applications have a lot of potential and that his company is investing in augmented reality developments on its devices.
The news was enough to catapult metaverse-related tokens by up to 36%, including Flow, The Sandbox (SAND), Decentraland (MANA), Enjin Coin (ENJ), and Arweare (AR).
On the other hand, Terra (LUNA) was impacted after the Avalanche-based reserve currency Wonderland Money (TIME) announced that a pending proposal would determine whether the project closes up shop or not. As a result, the MIM stablecoin dipped below 1.00 and some speculate that this may have had a knock-on effect on Terra’s LUNA and UST token.
Scalability and interoperability blockchain solutions Cosmos (ATOM), Fantom (FTM), and Harmony (ONE) presented negative performances after the Ethereum hash rate surpassed 1.11 PH/s, its highest level ever registered. A higher hash rate indicates that more miners are joining the network, which helps to cement blockchain security.
Tether premium and CME futures showed improvement
The OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar. Figures above 100% indicate excessive demand for cryptocurrency investing. On the other hand, a 5% discount usually indicates heavy selling activity.
OKEx USDT peer-to-peer premium vs. USD. Source: OKX
The Tether indicator continued to display strength as it stood above 99% over the past seven days. That is in stark contrast to three weeks ago when panic selling from China-based traders drove the indicator to a 4% discount.
To confirm that the crypto market structure has improved, traders should analyze the CME’s Bitcoin futures contracts premium. This metric analyzes the difference between longer-term futures contracts to the current spot price in regular markets.
Whenever this indicator fades or turns negative (backwardation), it suggests that there is bearish sentiment.
BTC CME 2-month forward contract premium vs. Bitcoin/USD. Source: TradingView
These fixed-month contracts usually trade at a slight premium, indicating that sellers request more money to withhold settlements for longer. As a result, futures should trade at a 0.5% to 2% premium in healthy markets, a situation known as contango.
Notice how the indicator flirted with the backwardation from Jan. 18 to 24 as Bitcoin dipped below $42,000. However, as BTC showed signals that $33,000 could have been a local bottom, the futures markets recovered a healthy 0.5% premium.
Considering that the aggregate cryptocurrency market capitalization is down 22% in 2022, the market structure looks primed for a recovery.
Barring a significant change in these fundamentals, Bitcoin bulls are probably beginning to feel comfortable adding positions below $40,000.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
The co-founder of the embattled Wonderland decentralized finance project is preparing to pull the plug following a deeply divided community vote.
On Jan. 30, Wonderland co-founder Daniele Sestagalli tweeted that the Avalanche-based reserve currency experiment is coming to an end. He added that the divided community “means that we failed.”
The vote to save or wind down the project came after Sestagalli asked former partner and Wonderland treasury head Michael Patryn (who goes by the pseudonym ‘0xSifu’) to step down late last week.
Patryn, who has changed his name on a number of occasions, was sensationally revealed on Jan. 27 to be the co-founder of the defunct Canadian crypto exchange QuadrigaCX. He has also been previously convicted of credit card fraud and pleaded guilty to several related offenses in the early 2000s.
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Wonderland experiment is coming to an end. It is clear from the vote that the community is divided. The core and heart of Wonderland is still the community. If we cannot find agreement on wether to continue or not, it means that we failed.
— Daniele never asks to DM (@danielesesta) January 30, 2022
There were several active votes on the Wonderland governance forum, however, the vote to wind down the project and return the treasury back to its holders had 55% voting to save it and 45% in favor of disbanding at the time of writing. Sestagalli said that the division has resulted in a single path forward:
“The duty of the Team is to enact the will of the token holders. As the vote is so close to 50/50 there is only one path forward, it is to reimburse/unwind.”
He added that he is working with the team on a new proposal. However, it was pointed out by those in favor of keeping the project going that the community was not split. They suggested that the token allocation was split, which raised other concerns among the community.
I am ready to listen to what you have in mind, so please do not take this as FUD or hate, I just want to correct a point here
The community is not split 50-50. The token allocation is. The community as individuals voted overwhelmengly No and against all odds, we eeked out a win pic.twitter.com/nBS3cCRe39
— 0x von Bismarck (@0xVonBismarck) January 30, 2022
A number of alternative proposals have been put forward to save the project from going under. These include another ongoing discussion on a potential merger with Wonderland and Abracadabra, a DeFi lending protocol and yield strategy generator.
Additionally, on Jan. 31, a lengthy proposal for Wonderland 2.0 was published by members of the community known as “Frogs” suggesting a transition of the existing protocol and treasury to a new DAO structure with a more transparent governance system.
Related:Daniele Sestagalli discusses Wonderland’s future after QuadrigaCX co-founder dox
The DeFi imbroglio has had ripple effects throughout the ecosystem with other networks such as Terra also feeling the impacts. The close ties between Wonderland and Abracadabra’s MIM (Magic Internet Money) token have also impacted Terra’s ecosystem since MIM is used for yield farming with the Terra stablecoin, UST.
The stablecoin has dipped below its peg recently on Wonderland concerns, and this has had a knock-on effect on LUNA which is used for its price-stabilization mechanism.
LUNA prices are currently down 13% over the past 24 hours as investors have been liquidating. Meanwhile, Wonderland’s native TIME token has crashed nearly 60% since the debacle began last week and is now languishing 96% down from its Nov. 7 all-time high of just over $10K.
Daniele Sestagalli has called for Wonderland to wind down due to divisions in the community.
Sestagalli made the comments despite a community vote that saw a majority of respondents signal that they want to save the project.
The statement follows a dramatic week for the Wonderland community after the project’s treasury manager was outed as a former convict and serial criminal.
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“Wonderland experiment is coming to an end. It is clear from the vote that the community is divided,” Sestagalli wrote.
Wonderland Drama Continues
Daniele Sestagalli has called time on Wonderland.
The disgraced DeFi founder, who rose to prominence in the community at the helm of Wonderland late last year, posted a tweet storm late Sunday stating his feelings on how it should wind down. “Wonderland experiment is coming to an end. It is clear from the vote that the community is divided,” he wrote. “The core and heart of Wonderland is still the community. If we cannot find agreement on whether to continue or not, it means that we failed.”
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Wonderland experiment is coming to an end. It is clear from the vote that the community is divided. The core and heart of Wonderland is still the community. If we cannot find agreement on wether to continue or not, it means that we failed.
— Daniele never asks to DM (@danielesesta) January 30, 2022
The statement drew reference to a community vote over how Wonderland should move forward after what’s been a dramatic week for the protocol. Earlier this weekend, Wonderland community members voted to oust the project’s treasury manager 0xSifu after he was identified as Michael Patryn, a former convict who co-founded the QuadrigaCX exchange (QuadrigaCX made headlines in 2019 when it suddenly shut down after Patryn’s partner Gerald Cotten vanished with $169 million of investors’ funds). Amid the drama, Sestagalli published a Mirror post stating that he thought Patryn should step down from the project before suggesting that the community “should get professionals onboard” to manage the treasury. Although the vote to kick Patryn saw an overwhelming majority of 87.5% vote to replace Patryn, Sestagalli has stated that community divisions signal the end of the project.
Multiple other community votes have been running on Wonderland’s Snapshot page over the weekend, with mixed results. One titled “Vote “YES” for wind down” has a description that reads “If you couldn’t trust Dani or sifu after all this time, you gonna trust new management found within 5 days? Vote yes,” with two options to vote: “YES” or “yes.” It’s received 257 votes so far.
Another similar poll suggests winding down the project and returning the treasury to TIME holders. 53.51% of votes opted in favor of the proposal and 46.49% opposed it. Another calls to save both Wonderland and the treasury. So far, 53.73% of 3,127 respondents have signaled that they are in favor of keeping the project running.
Should the project fold, it’s still unclear what will happen to Wonderland’s $708.6 million treasury. Some havesuggestedthat there’s a risk that the founding team will take a large portion of the funds despite the community reaching a majority consensus on returning the funds to TIME holders.
As news of 0xSifu’s identity surfaced Thursday, Wonderland took a major hit. Sestagalli also suffered embarrassment after he admitted that he had known of 0xSifu’s patchy history for a month. The so-called “Frog Nation”—former Sestagalli fans who banded together around Wonderland and his other projects, Abracadabra and Popsicle, alsoappeared in disarray as the news spread across the community. Critics slammed Sestagalli for failing to disclose Patryn’s identity, and token prices for each of his projects tanked. On Friday, he said that he had received multiple death threats over the debacle.
TIME is down again today, trading at $360 at press time. It’s over 96% short of its all-time high.
Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.
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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
On Friday, Daniele Sestagalli, co-founder of decentralized finance, or DeFi, protocol Wonderland and stablecoin protocol Abracadabra, issued a statement on the path forward after the doxing of his colleague Michael Patryn:
“Do we wind down or continue to fight for the aspect of an investment DAO [decentralized autonomous organization] being a revolutionary new organization? For the option that I am for, which is to fight and bring someone new and experienced to manage the treasury.”
The day prior, an investor uncovered the identity of Wonderland’s chief financial officer to be Patryn, who was the former co-founder of defunct Canadian cryptocurrency exchange QuadrigaCX. Over $145 million worth of QuadrigaCX customers’ funds are still missing after the mysterious death of its co-founder in late 2018. In addition, Patryn was convicted of operating a credit card fraud scheme under a different name in 2002.
Although no allegations of misconduct have taken place during Patryn’s tenure at Wonderland, the thought of appointing an individual with past criminal financial mishaps to manage the protocol’s treasury raised alarms among many Wonderland users. In a forum proposal cited by Sestagalli, its author, co-founder of Bastion trading known as “TheSkyHopper,” calls for the immediate removal of 0xSifu (Michael Patryn) from treasury management and proposed for members of his firm to join in as replacements. One user, El_jefe_NYC, commented:
“This is EXACTLY the type of action Dani needed to do in these hard times. That’s how a leader is supposed to react. We will grow back MUCH stronger moving forward.”
Wonderland is a reserve currency protocol built on the Avalanche blockchain. On Jan. 2, before the recent crypto market turmoil and the Michael Patryn dox, Wonderland’s treasury balance amounted to $1.9 billion in total value locked. However, that has dropped to $278 million at time of publication.
Wonderland, Abracadabra, and Popsicle have been hit hard in the market today.
The weak price action follows the news that Wonderland’s treasury manager co-founded the QuadrigaCX exchange before it shut down with $169 million of customers’ funds.
Sestagalli has published a new blog post today suggesting a path forward for the Wonderland project.
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It’s been a tough few days for the Frog Nation.
Wonderland Plummets on 0xSifu Saga
The Frog Nation is licking its wounds.
Wonderland Money, the Avalanche-based Olympus DAO fork created by Daniele Sestagalli, suffered a dramatic downturn Thursday when it was revealed that Sestagalli had enlisted a criminal to oversee the project’s treasury. Private messages shared by an on-chain analyst known as zachxbt revealed that Wonderland’s pseudonymous treasury manager 0xSifu was Michael Patryn, a convicted fraudster who co-founded QuadrigaCX exchange before it was shut down with $169 million in investors’ funds unaccounted for. Following the revelation, Sestagalli admitted that he had known of 0xSifu’s identity for a month.
Wonderland traded in the red as the news broke, briefly hitting an all-time low of $262. Following a short-lived recovery, it’s down again today, currently trading at $330. It’s almost 97% short of its record high. Wonderland is part of a class of so-called “DeFi 2.0” projects that aim to offer innovative ways to capture liquidity and offer yield for users. It uses a rebasing mechanism similar to the one popularized by Ampleforth and incentivizes users to stake tokens to generate yield. Notably, they can also use the tokens they earn as collateral to borrow a stablecoin called Magic Internet Money to further increase their yields. As there is high leverage within the system when more users deposit collateral, slight downward moves can cause violent liquidations. There was a liquidation cascade Monday that saw Sestagalli lose an eight-figure sum. Wonderland and other similar protocols have occasionally been branded as “Ponzi” schemes by critics as they rely on new users entering to prop up the incentives and often offer questionably high yields. Another similar protocol to Wonderland called Redacted Cartel is currently paying out 86,409% APY to users who stake its BTRFLY token.
Daniele Sestagalli Projects Turn Red
Besides Wonderland, Sestagalli’s two other projects, Abracadabra Money and Popsicle Finance, have also been hit hard over the last few days. Abracadabra, which mints the Magic Internet Money stablecoin via a token burning mechanism, is down to a market cap of $429.1 million after its SPELL token dropped 14.8%. Magic Internet Money is also trading below its peg at $0.98 due to a lack of sufficient collateral backing it. Popsicle, meanwhile, is down 7.7% today, continuing a months-long descent from its November all-time high of $66. It’s about 94% short of the peak at current prices.
Wonderland, Abracadabra, and Popsicle are three preferred projects of the “Frog Nation,” a community of crypto enthusiasts that gathered around Sestagalli soon after he rose to prominence late last year. Sestagalli led the Frog Nation on a campaign dubbed OccupyDeFi in what he described as an attempt to bring decentralization back to the DeFi space. Sestagalli took shots at centralized stablecoins like USDC, as well as protocols like Maker (the early Ethereum project relies on USDC to collateralize its DAI stablecoin).
While Sestagalli’s three projects have experienced major corrections, he appears set on making amends. A few hours ago, he published a Mirror post asking the community to proceed with a vote to decide Wonderland’s future. “I made a mistake, got blinded and I am sorry for that, Wonderland itself has achieved some big things and the aspect of an Investment DAO to me still is incredibly interesting,” he wrote with a suggestion to recruit professionals to manage the treasury. “It is now up to the community to decide.”
Disclosure: At the time of writing, the author of this feature owned ETH, BTRFLY, and several other cryptocurrencies.
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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
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Wonderland Treasury Manager Outed as QuadrigaCX Co-Founder
0xSifu, the pseudonymous treasury manager of the troubled Avalanche-based protocol Wonderland Money, has been identified as Michael Patryn, a former convict and co-founder of the collapsed cryptocurrency exchange QuadrigaCX. 0xSifu…
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Frogs in Meltdown as Wonderland Turns to Black Forest
Wonderland’s TIME has plummeted around 40% in 24 hours. It’s currently trading at around $500 per coin, down 95% from an all-time high above $10,000. Wonderland’s TIME Trades Below Backing…
Abracadabra.Money is a lending protocol that allows users to deposit interest-bearing assets as collateral to borrow a stablecoin called Magic Internet Money that can be used across multiple blockchains. Abracadabra.Money…
According to Bloomberg, a decentralized finance project called Wonderland involving a felon associated with Canadian cryptocurrency exchange Quadriga has sparkedwidespread controversy, turning DeFi into a financial felon’s wonderland.
Sifu was identified by an anonymous Twitter user as Michael Patryn, the co-founder of the failed Canadian cryptocurrency exchange QuadrigaCX.
Launched by Sestagalli and 0xSifu in September 2021, Wonderland runs on the Avalanche blockchain.
The Quadriga exchange has cost 76,000 investors in Canada and about C$169 million ($133 million) since the death of Quadriga co-founder Gerald Cotten in 2018 One of the most famous large-scale fraud incidents to date.
Ernst & Young, the trustee of the now-bankrupt cryptocurrency exchange QuadrigaCX, publisheda report showing that almost 17,000 people have filed for the remaining assets of the crypto exchange in 2020.
Wonderland’s native token is TIME, and the current total value locked in the protocol is nearly $680 million, falling to an all-time low of $335 on Thursday before recovering to around $440.
Co-founder Daniele Sestagalli said Thursday that he asked Wonderland’s treasurer, who goes by the alias Sifu or 0xSifu, to step down.
A crypto wallet identified as belonging to Patryn appeared to be rapidly dumping various tokens on Thursday, with its total net worth dropping from $450 million to $70 million in a matter of hours, according to data from trackers DeBank and Zapper.
MyCrypto founder Taylor Monahan also traced a note marking a wallet as Patryn’s, which identified it as the Ethereum address of his Ledger hardware wallet.
She said the wallet is still active now, along with a transaction to 0xSifu’s address — a 17 ether ($42,500) transaction. This finding supports the fact that the two are the same person.
MyCrypto founder Taylor Monahan noted that on-chain evidence supports Zach’s claims. In 2019, she tagged a wallet as Patryn’s based on a note that identified it as the Ethereum address of his Ledger hardware wallet. She then showed that the wallet was still active, including transactions to 0xSifu’s address — such as a transaction of 17 ether ($42,500).
As reported by Blockchain.News on September 24，American over-the-top content platform and production company Netflix Inc is set to premiere a documentary revealing the fall of a once-popular Canadian cryptocurrency exchange QuadrigaCx and the dead of its founder, Chief Executive Officer Gerald Cotten. He left the trading platform in chaos.
