While reserve-based assets like stablecoins have weathered the carnage of the crypto market over the past two weeks, rebase tokens like Wonderland (TIME) and Olympus (OHM) have taken their big hits.

Ohm price chart. Source: Coinecko

Wonderland (TIME) is down more than 97% from its all-time high (ATH) and OHM is down more than 95% from its own ATH.

TIME price chart. Source: Coinecko

At the time of writing, Wonderlands TIME is down 36% after blockchain executives revealed that “Sifu,” a core member of the founding team, has been accused of being a serial scammer over the long period, with a record of convictions and deportations . He is also the co-founder of QuadrigaCX, a failed Canadian crypto exchange.

‘Sifu’ controversy

Avalanche-based Wonderland has been among the most popular crypto protocols over the past few months, with community members dubbing themselves “Frog Kingdom.” The protocol locked in billions of dollars in investor funds at its peak, but confidence was mixed as of Thursday morning.

“0xSifu is QuadrigaCX co-founder Michael Patryn,” according to Zach, an anonymous Twitter account with a track record of exposing crypto scams and nefarious practices. “If this doesn’t sound familiar, it was the Canadian Stock Exchange that collapsed in 2019 after creator Gerald Cotten disappeared with $169 million.”

1/ This needs to be shared @0xSifu is the co-founder of QuadrigaCX, Michael Patryn. If you’re not familiar, this is the Canadian stock exchange that disappeared with $169 million in 2019 after the disappearance of founder Gerald Cotten

I confirmed this to Daniele via messages. pic.twitter.com/qSfWNnQPhr

— zachxbt.eth (@zachxbt) January 27, 2022

Michael Patryn, also known as Omar Dhanani, was reportedly sentenced to 18 months in prison for his involvement in identity theft related to bank and credit card fraud in 2015. According to Bloomberg, 22-year-old Dhanani pleaded guilty to operations crew .com, a now-defunct marketplace that traded more than 1.5 million stolen credit cards and bank card numbers.

TayVano, co-founder of mycrypto, authenticates the claim with other online evidence. She confirmed that she tagged Patryn’s wallet with a note in 2019 that identified her as his Ethereum address. On-chain data shows that the wallet is active and has completed transactions to 0xSifu’s address.

Source: Etherscan

“Knowing and yet ignoring” infuriates the community

Wonderland founder Daniele Sestagalli confirmed the allegations in a later tweet, saying he was aware of Sifu’s identity and ties to QuadrigaCX:

“It has been reported that Sifu, who runs Wonderland’s Treasury, was previously a co-founder of QuadrigaCX, and there have been other incidents in the past.

I discovered this a month ago, my opinion is that an individual’s past does not determine their future, so I gave them a chance to rebuild their life. I saw that the community was very divided over his choice of finance manager after learning about his past.”

The congregation did not agree with Sestagalli’s response. Inverse Finance founder Nour Haridy said in a response:

“In 2005 he committed loan and bank fraud. In 2007 he admitted to hacking, theft and computer fraud. In 2018, he and his partner “lost” access to $115 million in client funds. I agree that prisoners deserve a second chance, but this is NOT about being convicted.”

Cryptocurrency exchange QuadrigaCX was founded by Gerald Cotten and Patryn in 2013 and quickly grew to become one of the largest cryptocurrency exchanges by trading volume in Canada. Cotten died in December 2018 after a trip to India that found more than $190 million worth of cryptocurrencies from 115,000 customers missing Bitcoin Magazine previously reported.

Where the money went is still a mystery. Cryptocurrency circles were quick to label the whole incident an exit scam — a term for suspected scammers who steal investor funds after establishing trust. After the Ontario Securities Commission investigated further and found that QuadrigaCX was viewed as a Ponzi scheme. However, it also notes that most of the lost funds were deposited after Patryn left the exchange in 2016.

Patryn has remained in the spotlight ever since, to the point where he was revealed to be one of the architects behind Wonderland.

Sestagalli said in the post that Wonderland funds are secured with a wallet that requires multiple signatures to access, allaying investor concerns.

However, sentiment on Crypto Twitter is still surging.

Hardcore Wonderland fans are considered “frogs” and in addition to the controversial issues with Sifu, the frogs are also upset about the price drop. The Wonderland Twitter threads and the group’s Discord and Telegram channels are full of angry frogs.

The Wonderland protocol itself is also linked to popular defi projects such as stablecoins Magic Internet Money (MIM), Popsicle Finance, and Abracadabra.money. As OHM, TIME and WMEMO have suffered heavy losses, the rebase token capitalization has also fallen significantly below. Ampleforth (AMPL) is down 17.4% over the past week, Cartel redacted (BTRFLY) is down 69%, Klima dao (KLIMA) is down 34.2% and Temple Knife (TEMPLE) is down 31.2% over the same period.

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