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The scandal in the Wonderland DeFi protocol community has finally seemed to be resolved. Or not. It all started a few days ago. On-chain detective alias Zac (zachxbt.eth) revealed that the co-founder of Wonderland alias 0xSifu is Michael Patrin, co-founder of the infamous fledgling Canadian crypto exchange QuadrigaCX. The story stirred up the community and ended sadly for Patrin. He was removed.
An expert investigating crimes in the cryptocurrency market, in support of his statement, posted on his Twitter correspondence with the founder of the Wonderland project, a top influencer in DeFi and the founder of Abracadabra, Time, Popsicle, Daniele Sestagalli.
In the correspondence, Sestagalli admitted that the co-founder of the Wonderland (Time, wMEMO) project – the anonymous character 0xSfiu – is the former co-founder of the Canadian QuadrigaCX exchange Michael Patryn.
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
“This needs to be shared: 0xSifu is QuadrigaCX co-founder Michael Patrin. For those not in the know, this is a Canadian exchange that collapsed in 2019 after its founder, Gerald Cotten, disappeared with $169 million,” he told his subscribers.
Sestagalli explained his position: “Today, the past of our team member 0xSifu will be actively condemned. I want everyone to know that I knew about it and decided that a man’s past does not determine his future.”
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
The community met such statements with indignation. But the Wonderland founder stressed that he has no prejudice towards Patrin: “He has become a friend and part of my family, and if his past hurts my reputation, then so be it.”
Sestagalli admitted that he found out that such 0xSifu was only a month ago, but decided to leave him as the manager of the protocol treasury.
How did Michael Patrin excel?
In response to Sestagalli’s excuses, Twitter users recalled that Michael Patrin is a well-known person, and he is a defendant in several criminal cases. In the United States, he was sentenced to 18 months in prison. He was accused of involvement in the theft of personal data of bank and credit card users in 2005. In 2007, Patrin pleaded guilty to criminal charges of burglary and computer fraud. Patrin officially changed his name twice, from Omar Dhanani to Omar Patrin in 2003 and to Michael Patrin in 2008. And this is if you do not remember the history of the bankrupt QuadrigaCX.
History of QuadrigaCX
The founder of the QuadrigaCX exchange, 30-year-old Gerald Cotten, died unexpectedly in December 2018. According to testimony from his widow, Jennifer Robertson, only Cotten had sole access to client funds held in the exchange’s cold wallet. In March 2019, the FBI became interested in the case.
New facts about Cotten’s biography were revealed in June 2019 – Ernst & Young published a report revealing numerous cases of misappropriation of Quadriga users’ funds by Cotten. “User funds received and held by Quadriga appear to have been used by Quadriga for a number of purposes other than funding user withdrawals,” the report stated.
Instead of storing user funds exclusively in Quadriga’s hot and cold wallets, Cotten transferred large amounts to his personal accounts on competitor exchanges. According to EY, Cotten either exchanged user funds or used them as collateral for his margin trading activities.
The investigation also revealed that Cotten and his wife were withdrawing “significant amounts of fiat” from the exchange. A couple of revelers have acquired – either personally or through their companies – a large number of assets, including real estate and personal property. According to the report, the couple indulged in travel using private jets.
Logical conflict resolution?
The scandal affected the price of Wonderland’s TIME tokens. Two days after Zac’s posts and Sestagalli’s confessions, the Wonderland DeFi protocol community voted to remove Patrin from his position as Treasurer, reports The Block. The vote was taken by TIME token holders holding a total of 64,000 tokens. (One token gives the right to dispose of one vote). 88% of token holders voted that 0xSifu should be removed from office.
The Wonderland project was launched in September 2021 by Sestagalli and 0xSifu as a fork of the Olympus protocol on the Avalanche blockchain. Members of the Wonderland community call themselves “frogs” – Frog Nation. The Wonderland community includes users of Abracadabra, Popsicle Finance and now Sushi (the community of the most popular decentralized exchange SushiSwap).
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