In recent Defi DAO Wonderland collapsed due to 0xSifu who is the co-founder of QuadrigaCX Michael Patryn, a former expert on scamming people, while the founder Gerald Cotten died suddenly in 2018 and took investors’ $250M into his grave. How come a DAO becomes a scam and rug pull investors?

TL;DR

0xSifu is an ex-criminal who ran a scam business and was sentenced to 18 months in federal prison for multiple counts of fraud. The verification process will have to be extensive to exclude bad characters.

Omar Dhanani

Michael Patryn's previous name is Omar Dhanani. He is an expert on the Ponzi scheme. HYIP was the type of Ponzi scam that uses social media to recruit people and ask for their investments. Once a few people receive some rewards in the early stages, they will help to recruit more people. HYIP collapse will generally blame external factors such as a hack, a theft, or even a bad investment. It is a type of typical financial fraud to scam away people’s money.

Sifu’s Rug Pull

It starts with when the community votes away Sifu’s treasury manager power, Sifu starts his money transfer to a coin mixer and then into his own wallet. It brought skepticism around such a move.

Wonderland DAO Is Not Decentralized

Somehow, Sifu got his way to withdraw funds into his own wallet without a multisig voting approval that raised a concern on how DAO can run to prevent rug-pulling from one person.

Decentralized Mechanism

For managing treasury, one needs to decentralize one’s power to fully control treasury funds. Rather, it needs a collective decision on how such funds should be distributed. Verification may also need to be implemented to elect contributors to guard for the community.

In Conclusion

DAO has a long way to go. To be able to become a more decentralized organization, the collective voting process is essential for the community to operate sustainability.

In recent Defi DAO Wonderland collapsed due to 0xSifu who is the co-founder of QuadrigaCX Michael Patryn, a former expert on scamming people, while the founder Gerald Cotten died suddenly in 2018 and took investors’ $250M into his grave. How come a DAO becomes a scam and rug pull investors?

TL;DR

0xSifu is an ex-criminal who ran a scam business and was sentenced to 18 months in federal prison for multiple counts of fraud. The verification process will have to be extensive to exclude bad characters.

Omar Dhanani

Michael Patryn's previous name is Omar Dhanani. He is an expert on the Ponzi scheme. HYIP was the type of Ponzi scam that uses social media to recruit people and ask for their investments. Once a few people receive some rewards in the early stages, they will help to recruit more people. HYIP collapse will generally blame external factors such as a hack, a theft, or even a bad investment. It is a type of typical financial fraud to scam away people’s money.

Sifu’s Rug Pull

It starts with when the community votes away Sifu’s treasury manager power, Sifu starts his money transfer to a coin mixer and then into his own wallet. It brought skepticism around such a move.

Wonderland DAO Is Not Decentralized

Somehow, Sifu got his way to withdraw funds into his own wallet without a multisig voting approval that raised a concern on how DAO can run to prevent rug-pulling from one person.

Decentralized Mechanism

For managing treasury, one needs to decentralize one’s power to fully control treasury funds. Rather, it needs a collective decision on how such funds should be distributed. Verification may also need to be implemented to elect contributors to guard for the community.

In Conclusion

DAO has a long way to go. To be able to become a more decentralized organization, the collective voting process is essential for the community to operate sustainability.