After a little-known crypto called Wonderland collapsed last week, investors were left wondering how it happened, and the shocking answer may change everything.
I haven’t always traveled in the best circles…
Sure, my morals and virtues may have prevented me from doing any real damage to my life or reputation, but I’ve experienced the underside of humanity with people that were less-than-virtuous, to say the least.
Get this: I once worked for a guy that turned out to be one of the biggest cocaine runners in my state! While I didn’t know about the shady dealings at the time, looking back, there were definitely signs…I was just too naive and oblivious to care.
After he was busted and I read about it all in the papers, I was saddened to learn that this guy who I had considered a friend was actually someone I didn’t know at all.
It was NOT good for my trust issues, but I learned a valuable lesson: sometimes people aren’t what they seem.
These days, that’s a lesson everybody needs to learn, especially where money is concerned. It’s getting harder and harder to tell the difference between friend and foe.
The internet offers so much anonymity that anyone can pose as just about anyone else…and investors in Wonderland (TIME), a new, lesser-known crypto startup, learned this lesson firsthand.
A Hard Lesson In Trust
Last week saw the crypto project collapse when their native token dropped more than 60% in value.
And even though Wonderland is relatively small compared to other cryptos, the 60% doink ripped through the entire crypto market, exposing once again just how vulnerable the whole thing is. Even little missteps were enough to send a wide range of coins into chaos.
While that was a tough pill to swallow, it was made even tougher once the reason for Wonderland’s collapse went public–and this situation should force us to pay closer attention to cryptos we put our money into.
The simple act of investing requires trust in the investment…and as they say, trust must be earned.
So, what happened with Wonderland?
Well, before we get into that, we need to explain what Wonderland is.
Wonderland was the first “fork” of Olympus DAO (decentralized autonomous organization), the goal of which was to form a decentralized, policy-controlled, reserve-backed currency system on the Avalanche Blockchain. Their native coin, TIME, was to be backed by assets in Wonderland’s treasury.
And they were successful, becoming one of the biggest of their kind.
When Wonderland was founded in 2021, there were two developers listed on the project. The first was Daniele Sestagallia, a prolific crypto developer known throughout the market, whose involvement lent all kinds of credibility to the project.
The second name was listed simply as Sifu, an obvious (and arrogant) pseudonym, meaning “Master” in Chinese, often used in martial arts circles.
Now, this should have been a red flag, but the fact that Sestagalli was tied to the project may have obscured it–and that turned out to be a HUGE mistake.
It was recently revealed that Sifu’s real name is Michael Patryn, cofounder of a crooked Canadian crypto exchange that wound up defrauding investors of somewhere in the neighborhood of $190 million.
That’s nice, right?
Well, on top of that, consider that Patryn is also a convicted felon who counts identity theft and credit card fraud among his many criminal talents.
The revelation of this news shocked investors and forced a sell-off of the company’s stablecoin, kicking off the 60% drop to an all-time record low of $300.
Now, consider that TIME traded at a record high of more than $14,000 just a few months ago, and you’re looking at a drop of a staggering 97%!
Of course, it should surprise nobody that the project announced it would be shutting down this week.
This sent shockwaves throughout the cryptoverse and taught us some valuable lessons.
First, if something is offering returns that are too good to be true, odds are it probably is.
The second, and arguably the most important lesson is that we should pause whenever we see that a coin’s founder is anonymous. Ask yourself wonder if it’s the best idea to invest when the coin isn’t being 100% transparent.
And finally, the third lesson: be cautious of any project that labels itself as a DAO but doesn’t act like one.
A DAO is a crypto community that’s owned and managed by its members, and decisions are made by the community through a vote.
However, in Wonderland’s case, key decisions were constantly taken by Sestagalli and Sifu with little to NO input from the rest of the community. That negates its DAO status.
This is a good thing…
Remember, crypto and Blockchain are relatively new. We’re going to experience growing pains.
Better to learn this lesson now than further down the road when it can do some REAL damage…
Am I right?
“The trust of the innocent is the liar’s most useful tool.” – Stephen King