How Did a Former Quadriga Exec End Up Running a DeFi Protocol? Wonderland Founder Explains

After one of the most turbulent 48 hours in recent crypto history, DeFi’s most free-running act shows signs that the episode may be coming to an end.

Popular chain analyst zachxbt revealed in a Twitter thread on Thursday morning that 0xSifu, the pseudonymous treasurer for decentralized finance (DeFi) project Wonderland, is in fact Michael Patryn – the co-founder of a notorious Canadian crypto-exchange that deceived investors. of more than $ 190 million.

Read more: Wonderland rattled after co-founder linked to failed QuadrigaCX exchange

The unveiling rocked “Frog Nation,” a loose conglomerate of projects, including Popsicle Finance, Wonderland and Abracadabra, all now run by prolific DeFi developer Daniele Sestagalli.

Frog Nation-related assets, including ICE, TIME and SPELL, fell more than 30% that day, and observers are now concerned that Abracadabra’s MIM – one of the largest algorithmically stable currencies with a circulating stock of more than $ 4, 6 billion, according to CoinGecko – could lose its pen.

In an effort to understand how Patryn is so deeply embedded in the organization, CoinDesk reached out to Sestagalli, who expressed doubts about the way he finally made his colleague’s past known to the community – but not about the work with him in the first place.

“I thought today, could I still have prevented harm today by saying, ‘Yes, is he?’ I do not know, “said Sestagalli.

Read more: Wonderland’s TIME is low from $ 420 after liquidation cascade

First meeting

Sestagalli told CoinDesk that he initially started talking to Patryn in a trading group with other prominent crypto personalities. Sestagalli has previously noted how Patryn has added valuable input into a variety of other chat channels, particularly with regard to yield farming mechanics.

When Sestagalli launched Wonderland, a fork of Olympus DAO, in September, he thought Patryn would be a natural fit, especially after Patryn made suggestions for Abracadabra features.

“When I decided I wanted to introduce Wonderland, I said to him, ‘I know you know a lot about OHM,’ and he had a deep understanding of bonding. [I said,] “Do you want to help me use the Olympus DAO model to raise funds for a DAO?” Sestagalli said. OHM is the native sign of the Olympus DAO platform.

While the two worked together, Wonderland grew into probably the most successful Olympus fork, which at one point even surpassed Olympus’ treasury. Sestagalli and Patryn became notorious for their aggressive use of treasury funds, investments in new ventures and the implementation of yield farming strategies, and were sometimes accused of recklessness.

“We had tons of meetings, moments and difficult decisions – that’s how I met him. Not as a person, but as Sifu, ”Sestagalli said.

Read more: Avalanche-Based Wonderland Makes Seed Investment In Betting Dapp

The two first met in person after Sestagalli had to flee his country of residence last year after threats against his family after his home address was doxed. Sestagalli invited Patryn and other Frog Nation developers to move in with him.

Patryn finally agreed, and as the two approached in person, Patryn revealed his past.

The ‘Quadriga situation’

According to Sestagalli, his personal experience working with Patryn led him to believe that the convicted criminal had turned a new leaf.

“In my personal opinion, I try to avoid judging people for what they have done in the past. I tried to hold on to the experience I had with him, and we worked together for many, many months, chatting every day and building successful things together. ”

Anonymous culture is popular in crypto, especially in DeFi circles where it is not uncommon for founders and prominent members to maintain a degree of anonymity.

Nevertheless, Sestagalli was stunned by the revelation and said he “feels like I’m living in a Netflix documentary.”

“When he told me, it was quite wild. ‘It’s me, it’s this,’ I was like ‘holy f ** k’. Of all the people I could encounter on my journey, I encountered him. What were the chances? ”

Coincidentally, Patryn first met Gerald Cotten on a message board and that relationship both online and then eventually developed personally when the two men started Quadriga.

Sestagalli says he conducted personal due diligence on Patryn’s background, but eventually decided to overlook his colleague’s history because Patryn “had no internal behavior in our experience that would raise any red flags.”

“I did my own research. I looked at it, I said, ‘OK, there’s a young guy who did some credit card stuff – do you understand? A few mistakes when he was young. “And then there was the Quadriga situation, which is definitely unclear,” Sestagalli said.

Patryn was convicted of identity fraud and spent time in federal prison in the US. At that time, he called the name Omar Dhanani and became “Michael Patryn” after serving out his time, something he had previously denied as recently as 2019.

QuadrigaCX was founded by Cotten and Patryn in 2013 and has quickly become one of the largest crypto exchanges in terms of trading volumes in Canada. Cotten died in December 2018 after a trip to India, after which more than $ 190 million worth of cryptocurrencies owed to 115,000 customers were reported missing.

Where the funds went remains a mystery, as Quadriga executives claimed that only Cotten had access to the private keys that contained the millions of dollars’ worth of client funds.

Sestagalli admitted that the circumstances surrounding Cotten’s death did bring him to a standstill.

“To be honest, at the beginning when I did my research, I had my doubts. You know? I was like, ‘Yo, I’m still a co-founder, I do not want to end up like the last one,’ ‘Sestagalli said with a laugh.

In the end, however, he chose to trust his gut.

“You can look at something from a distance, and you can look someone in the eye. I asked him, what was his version of the situation? And in my opinion, at that time, let’s be realistic – that was good enough. If it had not been for that, I would have evicted him. “

Community vote

Sestagalli has repeatedly claimed through the interview that the TIME treasury funds – which are now worth more than $ 700 million, according to a dashboard shared with CoinDesk – were previously managed by Patryn.

In addition, Patryn herself wrote in a Discord post Thursday morning that “there is no risk to Wonderland assets if anything happens to me.”

The funds are apparently managed through a multi-signature scheme, a popular tool that requires several individual signatories to approve transactions. However, multi-sigs are widely regarded as a minimum security tool, especially when used to manage a Wonderland-sized fund.

Sestagalli said that what happens next is in the hands of the rarely called Wonderland DAO.

“Now immediately, [Patryn] does not run the treasury, and the community must vote on whether he should stay. It will happen today, “he said.

A vote is now taking place to decide whether Patryn should be permanently removed from his post as treasurer.

Sestagalli noted that he would abstain from voting, only the seventh in the history of the DAO (decentralized autonomous organization). “I have already made my choice,” he said.

UPDATE (January 27, 18:26 UTC): Add information about Patryn’s conviction to identity theft.


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