DeFi is a psychedelic reimagining of its traditional origins.
The gains are intensified, but a bad trip reveals dark secrets.
Greed, deception, and convicted felons all have their place in the wonderland of decentralised finance.
How did we get here?
rekt goes down the rabbit hole.
When Olympus fell, other ponzis had to pivot.
Daniele Sesta, the self-proclaimed leader of the frog nation, quickly rose to “fame” in the DeFi community with a blend of populist Twitter content and tokens that made many people rich.
However, every idol relies on their lesser-known team, who often do most of the work.
Michael Patryn, formerly Omar Dhanani, was the co-founder of QuadrigaCX, notorious for their fraudulent activity and the mysterious disappearance of founder 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.
Sifu had already become hilariously rich through Wonderland, as well as his previous crimes, why feel the need to continue?
And once Sesta found out, why didn’t he come clean?
This story came straight from Twitter.
As ZachXBT wrote:
This tweet has gained ~3M impressions in ~24 hours. The story has had a huge impact.
We spoke to Zach to find out more:
What triggered this investigation?
What made you question 0xSifu's background?
Well I first posted about $TIME back in October after noticing the launch was sniped by CT insiders as well as a secret seed LP.
In the following months my suspicions began to build when transparency was poorly executed.
Ex: mixing personal wallets with treasury funds, lack of documentation, heavily centralized decision making.
Discussed a lot of this with Dani as well.
I received a tip off last week that Sifu was not who he said he was. Ended up confronting Dani about it. Sifu.eth also had a few links to Quadriga.
Have you considered the motives of the person providing the tip-off?
Why do you think this has emerged now?
Can we skip this question.
Daniele was already aware of 0xSifu's identity when you confronted him.
What would have happened if there had been no tip-off?
Would Daniele have kept 0xSifu's identity secret?
From my messages with Dani (seen in my thread) and also the statements made publicly it appears his identity would have remained private.
I can’t speculate too much with what would happen. You’re simply putting the community’s money at risk. Let them decide for themselves via governance. 0xSifu’s history isn’t a coincidence.
What do we know about 0xSifu?
Why did Daniele pick him for the role, and why would he try to protect him?
What made him worth the risk?
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.
According to Dani they met when Sifu 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.
A vote was called, proving that the “Frog Nation” does not share Daniele’s beliefs.
So Sifu is out, (“fUcK tHe SuiTs”), and it’s not only Daniele’s reputation that is damaged.
Andre Cronje had recently partnered with Daniele to launch his new project. The timing is noteworthy…
Could someone be looking to damage the reputation of Cronje’s new venture by association?
As well as personal worries, the incident had wide-ranging effects across DeFi markets.
The MIM and UST FUD has led to the highest ever daily volume on Curve Finance, as Wonderland’s stablecoin MIM has been under extreme sales pressure. This wallet alone has been steadily dumping ~$130M of MIM since the news broke.
What happens now?
The community is not happy.
Is this an admirable move, or is he betting on the fact that his bagholders may choose to turn a blind eye?
We will remember the fact that Daniele Sesta was forced into this admission, and if it weren’t for the whistleblower, then he would have continued to shield the identity of this convicted scammer from the community.
Dirty secrets like these are exactly the type of criticism that DeFi regularly faces from regulators, TradFi, and the public at large. Even if the majority is unhappy with the current system, how can we expect to convince new users to leave behind their safety net with scandals such as this?
TradFi regulators will use this as an easy win in their arguments against DeFi.
However, the truth is not all negative. Even under this intense stress test, MIM has not failed, and the Wonderland protocol has functioned as intended.
Despite the reputational damage this will cause to the industry, DeFi is here to stay.
Since Cronje and the launch of YFI, a harmful (even if not desired) trend of idolisation has arisen in DeFi, and Sesta is the latest example.
We created a situation where individuals are worshipped like gods. Where multimillion dollar rugs and hacks are shaken off and instantly forgotten. Where anonymous DAO members can do whatever they want with protocol treasuries worth hundreds of millions of dollars.
Surely this is not what we set out to create.
Put your faith in idols and you will get rekt.
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