Even The Most Known Companies Can Be Infiltrated by Scammers - Co-Founder Revealed to Be A Fraudster
Cryptocurrencies are notorious for being the source of frauds, such as the November Bitcoin scam in which Instagram users were forced to film “hostage-style videos.”
However, investors were shocked to learn that the co-founder of multi-billion dollar cryptocurrency protocol DeFi Wonderland was a convicted fraudster, according to CoinDesk. On Thursday morning, blockchain investigators took to Twitter to reveal that “Sifu,” a key member of DeFi Wonderland’s founding team, was actually Michael Patryn.
If you’re someone who wants to protect your financial transactions, then you’re definitely at the right place. We can give you the best practices in identifying red flags as well as help you in recovering your stolen money from scammers!
Table of Contents
The Co-Founder of QuadrigaCX Revealed To Be a Scammer
Patryn is thought to be a long-time serial scammer and the co-founder of QuadrigaCX, a failed Canadian cryptocurrency exchange that was operating as a simple Ponzi scheme, according to provincial regulators. “0xSifu is the Co-Founder of QuadrigaCX, Michael Patryn,” zach, an on-chain sleuth, tweeted. “If you are unfamiliar, that is the Canadian exchange that went bankrupt in 2019 after the founder, Gerald Cotten, vanished with $169 million.”
Patryn is said to have been convicted several times. Computer fraud, as well as bank and credit card fraud, are among his crimes. Despite discovering his true identity one month ago, Daniele Sestagalli, the founder of DeFi Wonderland, continued to work with him.
After Patryn’s true identity was made public, Setagalli tweeted, “I want everyone to know that I was aware of this and decided that an individual’s past does not determine their future.” I prefer to value the time we spent together without knowing anything about his past.”
Wonderland’s Patryn Scam Habits Started Ages Ago
Michael Patryn began defrauding people in the early aughts and was sentenced to prison at the age of 22 after pleading guilty to identity theft, credit card fraud, burglary, and grand theft in 2005.
Michael (then Dhanani) was identified in a Department of Justice press release as one of six operators of “Shadowcrew.com,” an online marketplace where stolen ID cards and credit cards were sold. Consumers lost more than $4 million as a result of the scheme.
Patryn was deported to Canada after spending time in prison and changing his name for the first time to “Omar.” Under this new alias, he launched a money-laundering website called “Midas Gold,” which was registered in Quebec, as well as another financial scheme called “VFS Network.”
Patryn meets Gerald Cotten on a forum called TalkGold, which is a gathering place for scammers and schemers to talk shop and discuss the most effective ways to take advantage of others. Gerald Cotten’s widow has made her new book public and recently told her side of the story to CBC.
Patryn begins to collaborate more closely with his younger, high-yield investment product compatriot, Cotten, against the backdrop of the Secret Service’s dismantlement of illegal online US dollar derivative Liberty Reserve. Cotton and Patryn moved to Vancouver and eventually found Quadriga Fintech Solutions, or as it’s more commonly known, Canada’s largest Bitcoin exchange QuadrigaCX.
Patryn renames himself “Michael Patryn” around this time and begins work on the new cryptocurrency exchange, as well as a Brazilian-Jujitsu non-profit, of all things. The BJJ unit vanishes, and the exchange famously ends in disaster.
If you have been scammed by an online scam then contact us to help you get your money back!
Do you suspect that someone had scammed you?
If you have any suspicion of a scam or phishing attack, then you can rely on EZChargeback to help you with protection, mitigation, and fund recovery.
You will feel safe knowing that experts with years of experience will be guiding you!
The co-founder of a multibillion-dollar cryptocurrency protocol was accused of being a serial scammer
Investors are alarmed after the co-founder of a multibillion-dollar cryptocurrency protocol was accused of being a serial scammer with a history of conviction and deportation, as well as the co-founder of a fraudulent Canadian exchange that went bankrupt.
According to CoinDesk, on Thursday, a Twitter user going by the handle zachxbt.eth accused “Sifu,” a core member of the founding team behind the popular Avalanche-based Wonderland DeFi (or decentralized finance) protocol and its TIME token, of actually being Michael Patryn.
Patryn, who changed his legal name twice, was the co-founder of QuadrigaCX, a Canadian exchange that shut down in 2018 after Patryn’s partner Gerald Cotten died suddenly in India, owing users around $190 million in cryptocurrency at the time’s exchange rate. Patryn and Cotten allegedly split up in 2016. Investigators later discovered that Cotten was running QuadrigaCX as a Ponzi scheme near the end of its life.
According to Bloomberg, Patryn has been convicted of several crimes, including computer fraud and bank and credit card fraud. Daniele Sestagalli, the founder of Wonderland, confirmed the allegation after the original tweets that revealed Sifu is Patryn. Sestagalli is a prolific developer who is responsible for a number of DeFi projects, including Abracadabra’s Magic Internet Money (MIM) token.
“I want everyone to know that I was aware of this and determined that an individual’s past does not determine their future.” “I choose to value the time we spent together without knowing his background above all else,” Sestagalli wrote on Twitter.
He later issued a statement explaining that he discovered Sifu’s true identity a month ago and has now decided to ask Patryn to resign.
“As I mentioned on Twitter, I believe in giving second chances.” “I’ve seen the community split on my decision to keep him as treasury manager after learning who he was and his history,” Sestagali wrote. “Whatever has happened has happened. After some thought, I’ve concluded that he should step down until a vote on his confirmation is held. Wonderland decides who manages its treasury, not me or the rest of the Wonderland team.”
Patryn co-founded QuadrigaCX, a popular Canadian cryptocurrency exchange, which he reportedly left in 2016. According to court documents filed by his wife, one of the co-founders, Gerald Cotten, died in India in 2018 as a result of Crohn’s disease complications. According to her sworn affidavit at the time, Cotten was the only person in possession of the exchange’s private keys, which meant that his death effectively locked up all of the users’ funds. Cotten allegedly kept them in “cold storage,” which means on an encrypted hard drive or USB drive.
When crypto prices crashed, QuadrigaCX couldn’t cover the demand for withdrawals and began operating as a simple Ponzi scheme, provincial regulators eventually determined.
To make matters worse, Cotten was gambling with other people’s money, with $115 million attributed to his fraudulent trading, according to provincial regulators. Cotten also lost $28 million on third-party cryptocurrency platforms, with only $46 million recovered.
Since the revelation, investigators have been combing through accounts associated with Patryn’s known Ethereum address, which Patryn has helpfully labeled as Sifu.eth. Taylor Monahan, CEO of MyCrypto, revealed that the Sifu.eth address was linked to an address that received 15,000 ETH from QudrigaCX’s smart contract nearly five years ago, after Patryn left the exchange
The community was surprised to learn that the co-founder of QuadrigaCX had moved on to work on another cryptocurrency project
As a result, the community was surprised to learn that the co-founder of QuadrigaCX had moved on to work on another cryptocurrency project. TIME, Wonderland’s token, is meant to be a “stablecoin” in the DeFi ecosystem, backed by a treasury of funds locked in by users. As a result, trust is an important component of that arrangement. The total value locked into Wonderland’s treasury in December was nearly $2 billion USD.
“You should get out of MIM and Wonderland TIME as soon as possible, along with any other garbage associated with sifu and those scammers, and yeah, this is financial advice,” a crypto YouTube account tweeted.
The Wonderland incident raises new concerns about the value of anonymity in the DeFi space versus the risks it presents, as well as the level of due diligence in the space. Indeed, according to a Reuters report this week, Binance, one of the world’s largest cryptocurrency exchanges, kept only weak checks against money laundering despite publicly promising the opposite.
The Wonderland DAO (decentralized autonomous organization) is currently preparing for a vote on whether or not to keep Patryn in the project.
The Many Faces of Michael Patryn - The Serial Scammer
Michael Patryn co-founded the now-defunct Canadian crypto exchange QuadrigaCX in 2013 with the late Gerald Cotten, but left three years later due to disagreements over the company’s plans to go public. The exchange went bankrupt in 2019 after losing $169 million in investor funds.
Patryn was sentenced in the United States for his involvement in an online identity theft ring. He changed his name twice with the Canadian British Columbia government, first from Omar Dhanani to Omar Patryn in March 2003, and then to Michael Patryn in 2008. In previous reports, he denied being Omar Dhanani. Patryn was charged with several crimes in the United States, including conspiracy to commit credit and bank card fraud in 2005. At the time, he was only 22 years old.
He allegedly ran the now-defunct website shadowcrew.com, which sold 1.5 million stolen credit and bank card numbers. Patryn admitted to a slew of unrelated crimes in 2007, including burglary, grand larceny, and computer fraud. He served 18 months in prison for some of his criminal cases before being deported to Canada, where he reinvented himself as a cryptocurrency trader.
“One of the reasons blockchain technology and DeFi are so powerful is that they are not prejudiced against your past.” I have no bias against @0xSifu; he has become a friend and a member of my family, and if his dox damages my reputation, so be it. “All frogs are equal to me,” Sestagalli stated.
What’s Wonderland Money & How is it Related to Michael Patryn?
Wonderland is a blockchain-based “decentralized reserve currency protocol” built on the Avalanche network. It was created by Sestagalli, who, along with OxSifu, launched the protocol in late 2021 as a fork of Olympus DAO.
Wonderland “aspires to be a reserve currency system built from an asset treasury.” TIME is the network’s native token. TIME, in contrast to most stablecoins that are backed by the US dollar, derives its value from a basket of crypto assets such as MIM. The protocol is an attempt to establish an autonomous monetary system.
Participants in Wonderland call themselves “frogs” or “frog nation.” This frog nation expands to include Defi protocols Abracadabra, Sushi, and Popsicle Finance, as well as another of Sestagalli’s creations.
According to CoinGecko data, TIME is down 16% in the last 24 hours to $409 at the time of writing. Since Monday, the token has fallen by 70% from $1,400. According to Defillama data, the total value locked in Wonderland was $146 million.
Sestagalli is currently collaborating with Yearn Finance’s Andre Cronje on a new project called Solid Swap. The project has been eagerly awaited. It employs the concept of vested escrow tokenomics to pay out more rewards and give long-term investors more voting power.
Patryn Steps Down
This tweet was followed by a statement in which Sestagalli explained how he discovered Patryn’s true identity. He also stated that, after further consideration, he had asked Patryn to resign.
“After some thought, I’ve concluded that he should step down until a vote on his confirmation is held. Wonderland decides who manages its treasury, not me or the rest of the Wonderland team “Sestagalli wrote
Although it appears that this case has concluded and Patryn will no longer be present to cause further harm, it does raise concerns about the level of anonymity present in the DeFi space.
In cases involving fraudsters and scammers, the risks far outweigh the benefits, and the space presents itself as an enticing area of involvement for those with a history of running afoul of the law. Could it be that in the DeFi space, as in real life, transparency is preferable?
Actions To Take In A Similar Situation & Avoid Being The Victim Of a DeFi Scam
Although this was one of the largest scam schemes ever carried out, it was essentially a con that cost hundreds of millions of dollars to hundreds of people. A scandal that should have been exposed sooner thwarted their financial ambitions. This is why information is key and you must stay informed of all current happenings in the market. Stay informed to stay safe!
do you need help?
A lot of those who contact us have questions and concerns about their personal and business data being compromised. We aim to arm you with the legal and technical know-how in the fight against scams. Also, we will be able to refer you to top scam recovery agencies.
Please fill up the form. Rest assured that our support team will get in touch with you