📈 Dump Diem

Canadian Crypto Dispatch readers may remember QuadrigaCX (and some of you may have even been victims of that scam). So you will be interested to learn that the defunct company is back in the news, and one of its co-founders is embroiled in another crypto scandal.

Scroll down to read the scandalous saga that crypto gumshoes solved!

Also in today’s edition:
🪙 Diem gets sold for $200 million

Trouble in Wonderland

DeFi platform Wonderland has plummeted in value and reputation after it was revealed via social media that the CFO is none other than Michael Patryn, the co-founder of defunct Canadian crypto exchange QuadrigaCX.

Michael Patryn aka Omar Dhanani aka Oxsifu has been entangled in a variety of financial crimes over the years, but his most infamous is QuadrigaCX, an exchange that ran like a Ponzi scheme before collapsing after the puzzling death of Patryn’s business partner in 2018. This Twitter thread gives a good rundown of the saga.

What happened: Wonderland’s token, TIME, lost 32% of its value after screenshots posted online confirmed that the man in charge of finances known as Oxsifu was actually Patryn.

The revelation surfaced on Twitter when user zackxbt posted screenshots showing that he had confirmed the identity of Oxsifu with Wonderland co-founder Daniele Sestagalli.
Sestagalli addressed the issue in a statement, admitting that he has known Oxsifu’s true identity for a month and believed Patryn deserved a second chance.

Through the looking glass: Wonderland is built on Avalanche, an ethereum virtual machine (EVM) compatible blockchain that offers lower fees and faster transactions. It is one of the first decentralized reserve currency protocols, with its TIME token is tied to a basket of other currencies.

This can offer great yields for investors, but also makes TIME more volatile as its price is tied to other volatile cryptocurrencies.

Why it matters: We all know a crypto winter is forecasted right now, and it looks like Wonderland will suffer some major frostbite with this scandal. After the entire crypto market took a dive over the weekend, Wonderland was hit with a massive liquidation Wednesday that continued into Thursday.

As of writing TIME is trading at US$287, a remarkable drop from its all-time high of US$10,063 in November of 2021. That’s a 96.9% drop in token value!

The financial exodus is an indicator that despite signs of froth in the crypto makers, investors still care a lot about the integrity of a platform and its team, with many Wonderland users outraged that Sestagalli would knowingly work with Patryn.

Facebook Dumps DIEM

Facebook’s attempt at creating a cryptocurrency has hit a wall as the social media giant prepares to sell off the assets of digital payment system Diem to Silvergate Capital for $200 million.

What happened: It’s been one hurdle after another for the Diem Association, the Meta Platforms Inc. payment project. Formerly known as Libra, the project has stumbled through name changes and leadership swaps, but its regulatory issues appear to have doomed the endeavour.

After a few failed partnerships, Diem partnered with Silvergate Capital Corp. who joined the project and approached the US Federal Reserve about issuing stablecoins tied to the value of the US dollar.
Last summer the US agency broke the bad news that it was skeptical of the plans and not keen to allow the activity. Silvergate Bank, an affiliate of the financial firm, didn’t want to risk issuing the new asset without federal approval, so no Diem coins were circulated.

Why it’s happening: In November the Fed explained that the only issuers of stablecoins they trust are regulated banks, fearing that a corporate stablecoin issuer risks a “concentration of economic power” that would be difficult to reel in.

Bloomberg has confirmed through an unnamed source that Silvergate will be purchasing what’s left of the DIEM project for $200 million, most of that valuation is for Diem’s intellectual property.

Why it matters: Meta is in talks about how to extract every last bit of capital out of this failure, including selling off intellectual property, as it scrambles to repay investors like Uber, Shopify and CoinBase to name a few.

Investment firms like Andreesen Horowitz might be pulling their cash from DIEM to prop up more exciting crypto ventures like Mysten Labs, a company started by a few ex-Facebook engineers, a blockchain startup that recently raised $36 million in a funding round led by Andreesen Horowitz.

Big picture: This is another disappointment for Meta, an organization that has recently faced scandal, criticism, US Senate hearings, and of course the Sweet Baby Ray’s sauce debacle. Its main earning platforms, Facebook and Instagram have seen a drop in popularity that could threaten the $85 billion dollar a year business model, but no doubt Zuck’s push into the Metaverse means the company isn’t done with crypto just yet.

Trouble in Wonderland

Facebook Dumps DIEM

Bits & Blocks

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