QUADRIGA INITIATIVE
CRYPTO WATCHDOG & FRAUD RECOVERY PLATFORM
A COMMUNITY-BASED, NOT-FOR-PROFIT
$8 400 000 USD
JANUARY 2022
GLOBAL
WONDERLAND MONEY
DESCRIPTION OF EVENTS
"The Defi WonderLand. Financial tools to grow your wealth - stake and earn compounding interest."
"Wonderland is a DeFi protocol mostly based on Avalanche. It is a fork of Olympus DAO, a decentralized reserve currency protocol that lets users deposit or sell tokens to the Olympus treasury in return for discounted OHM tokens. Wonderland quickly became a famous fork of Olympus. The current treasury balance of Wonderland [stood] at over $735 million, according to its website."
"Wonderland is the first decentralized cross-chain reserve currency protocol on the TIME token. Each TIME token is backed by a basket of assets (e.g., MIM, TIME-AVAX LP Tokens etc etc) in the Wonderland treasury, giving it an intrinsic value that it cannot fall below. Wonderland also introduces economic and game-theoretic dynamics into the market through staking and minting."
"Our goal is to build a policy-controlled currency system, native on the AVAX network and then bridged across different chains, in which the behavior of the TIME token! In the long term, we believe this system can be used to optimize for stability and consistency so that TIME can function as a global unit-of-account and medium-of-exchange currency. In the short term, we intend to optimize the system for growth and wealth creation."
"We intend to achieve price flatness for a representative basket of goods without the use of fiat currency, in order to allow the cryptocurrency industry to detach once and for all from the traditional finance world!"
"Wonderland is a cross-chain fork of Olympus. Our team is mostly anonymous, born from the DeFi Community. We aim at becoming a Decentralized Autonomous Organization, and we are actively working towards that goal." "Currently most of the decisions are taken by the core team, but we expect to be able to turn this into a DAO-governed model as soon as possible!"
"TIME is not a stablecoin. Rather, TIME aspires to become an algorithmic reserve currency backed by other decentralized assets. Similar to the idea of the gold standard, TIME provides free-floating value its users can always fall back on, simply because of the fractional treasury reserves TIME draws its intrinsic value from."
"Each TIME is backed by 1 MIM, not pegged to it. Because the treasury backs every TIME with at least 1 MIM, the protocol would buy back and burn TIME when it trades below 1 MIM. This has the effect of pushing TIME price back up to 1 MIM. TIME could always trade above 1 MIM because there is no upper limit imposed by the protocol. Think pegged == 1, while backed >= 1."
"Wonderland is currently unaudited! It is a fork of Olympus DAO on the avalanche Network, audits will occur at a later stage. Stay cautious!"
"All funds are Sifu. An on-chain sleuth discovered that all was not well in Sesta's Wonderland, and the impacts of Quadriga are far from forgotten."
"Wonderland launched last September [2021]."
"Patryn, a notorious name in crypto trading circles, was one of the co-founders of the endlessly mysterious defunct crypto exchange QuadrigaCX, alongside the (supposedly) deceased Gerald Cotten." "Separate from his involvement in Quadriga, Patryn also pleaded guilty to conspiracy to commit credit card fraud, burglary, grand larceny, and computer fraud."
"According to Dani they met when Sifu/Patryn DM’d him as an early Abracadabra investor. They exchanged ideas and slowly started to work together over time." "Perhaps his interactions with Sifu (unknowingly Omar) made him look past his history. Dani said however he believes in second chances." "Sestagalli claims he met Patryn in an online chat server with other DeFi insiders and decided to work together on his Olympus fork, Wonderland, due to Patryn’s deep knowledge of tokenomics."
"[U]nbeknownst to everyone but Sestagalli, Patryn was serving as treasurer for the hundreds of millions of dollars locked in Wonderland’s treasury, albeit controlling just one multi-sig key." "Sestagalli claims that he knew of Patryn’s past and decided to trust him with one of Wonderland’s multi-sig keys regardless."
"Patryn and Sestagalli had grown close, said Frog Nation’s spiritual leader in a CoinDesk interview." "Eventually, the QuadrigaCX co-founder felt comfortable enough to disclose his past. Sestagalli reckoned he didn’t encounter any red flags while working with 0xSifu, so he considered giving him a second chance."
"Sifu first became known after the Ruler/Cover fiasco when he dumped the treasury on Yearn. Sifu was to blame for a lot of it yet faced lots of backlash at the time." "Sifu [was] accused of taking $8.4m worth of $time from the Wonderland treasury."
"4.25k Time ($8.4m) was transferred from the Wonderland treasury to Sifu's private wallet on 1/15." "He then added it to his collateral on @mim_spell on 1/16 to prevent liquidation." "Sifu still ended up getting liquidated despite this." "This is all on-chain."
"The treasury is secured by a MULTISIG." "They would NOT approve $time taken out to provide his personal funds." "Because it's $time that the team OWNS." "There is a difference between "taking time from the treasury to avoid liquidation" and "staking team token allocation disbursement well before the crash".
"I was not at risk of liquidation when I added those tokens to the Abra position which I have been building since we launched the CDP. As I receive no cash salary, I sell tiny pieces here and there. I have expenses and cover many company costs."
“In my personal opinion, I try to avoid judging people for what they have done in the past. I tried to stick to the experience I had with him, and we had many, many months of working together, talking every day and building successful things together,” said Sestagalli (via CoinDesk, our emphasis).
“I did my own research. I looked into it, I said, ‘OK, there is a young guy who did some credit card stuff — you understand? Some mistakes when he was young. And then there was the Quadriga situation, which is definitely unclear.”
"A vote was called, proving that the “Frog Nation” does not share Daniele’s belief." "Wonderland DAO opened a vote to unseat Sifu on January 27 and passed it with a majority on January 29. TIME token holders with a combined over 64,000 tokens participated in the vote. (One token generally serves as one vote)." "TIME token holders voted in 88% agreement to replace Patryn as treasurer earlier this week."
"While TIME had been tanking for weeks before the revelation hit, word that Patryn had any sway at all in Wonderland’s DAO sent the token to all-time lows almost immediately."
"Despite initially backing Patryn, Daniele Sesta has now published an apology of sorts, and it seems the fate of Wonderland will now lie in the hands of the community."
"Patryn was caught “washing” $2.8 million worth of Ether through crypto mixer Tornado Cash shortly after the controversy broke, indicating he’d exited multiple positions, including Wonderland."
"The vote on winding the project down ended only after a dramatic stalemate, with some investors calling for the project to dissolve and for its treasury of user-contributed funds to be refunded, and others fighting in support of the project. In the end, the grass-roots campaign won by a slim margin, with 55 percent voting to continue. Despite the signal to carry on, what form it will ultimately take is currently unclear."
"At that point, the vote on whether to keep the project alive was around a 50/50 split, and Sestagalli said that the only way forward was to reimburse and unwind those who don’t want to be part of the community, and “find a new home” for those who feel “attached & inline with the Frog Nation Vision,” referring to the community of investors who have gathered around Sestagalli's multiple projects in DeFi."
“I do not agree about continuing this experiment,” he wrote. But then, a few hours later, Sestagalli backtracked and wrote on Twitter that “We will continue building together as a community and get out of the FUD [Fear Uncertainty and Doubt] together.”
Wonderland is a DAO which invests funds on behalf of members and has a asset-backed TIME token. One of the founders was Michael Patryn, who has a long and concerning history. This wasn't disclosed to users. At one point, $8.4m of funds were taken out of the multi-sig treasury in order to avoid liquidation (which happened anyway). This created controversy, that ultimately resulted in Michael Patryn's presence being revealed. The community voted to remove him and keep the project going. A significant amount of his funds were subsequently transfered through TornadoCash. It's not clear that any losses have been passed through to users.
HOW COULD THIS HAVE BEEN PREVENTED?
Having a full background check on team members can avoid any issues with secret pasts. Participants should be made aware of who holds keys to the multi-sig.
Rekt - Sifu Scandal (Feb 8)
WONDERLAND $TIME COLLAPSING! SIFU SCANDAL EXPOSED! WHAT HAPPENED TO WONDERLAND TIME? IS THIS THE END - YouTube (Feb 15)
Wonderland (Feb 16)
Introduction - Wonderland (Feb 16)
FAQ - Wonderland (Feb 16)
@thedefiedge Twitter (Feb 16)
Wonderland leader should've never trusted Michael Patryn with $1B crypto (Feb 16)
@rationalaussie Twitter (Feb 16)
@zachxbt Twitter (Feb 16)
$TIME Wonderland is about to change (Interview with Sifu, owner of TIME) : WonderlandTIME (Feb 16)
BREAKING NEWS: TIME / WONDERLAND IS ABOUT TO COMPLETELY CHANGE (Guest Sifu Treasurer of TIME) - YouTube (Feb 16)
Interesting post from /r/cryptocurrency on the Michael Patryn sifu scam : QuadrigaCX (Feb 16)
Michael Patryn (0xSifu) is sending $50M of ether though tornado mixer. : QuadrigaCX (Feb 16)
Wonderland votes out QuadrigaCX co-founder and considers closing down (Feb 16)
Popcorn Time: Crypto Project In Chaos After Co-Founder Outed as Fraudster (Feb 16)
@Wonderland_fi Twitter (Feb 16)
TIME Wonderland Drops 40% as CFO 'Sifu' Revealed to be Michael Patryn of QuadrigaCX (Feb 16)
Sifu Confirms He's Done And SEC News | Daily TIME Wonderland Update | 2/15/2022 - YouTube (Feb 16)
WONDERLAND $TIME SIFU (TREASURY LEADER) IS A FELON? - YouTube (Feb 16)
