Wonderland Lost

Time Wonderland, one of the most popular crypto projects of 2021, with a treasury that totaled over $1 billion at its peak, could be coming to an end. Worsening market conditions, poorly thought-out pivots, failure to perform on promises, risky overleveraging, and Wonderland’s CFO being revealed to be a convicted felon have put the entire project at risk of failure.

The Market Correction Hits

           In late December, the stock market began to enter a correction. Despite the theory that cryptocurrency should be a non-correlated asset, Bitcoin and the majority of crypto projects also saw major drops in prices. This caused Wonderland’s coins ($TIME & wMEMO) to drop in prices rapidly, causing the price to drop by 95% from its all-time high.

The Team Fails to Deliver on Airdrops

           The team pivoted the project from a decentralized autonomous organization (DAO) to a crypto venture capital fund. The Wonderland team would identify new crypto projects, invest in them, and support them as they grew. The projects that Wonderland invested in would give coins to Wonderland. Some of these coins would be given as a bonus to the investors through an airdrop. A process of sending free coins to investors’ wallets. Wonderland’s team promised three airdrops over late December and early January, none of which have been completed. The team still promises that they are coming but has not specified a date or plan of action.

Public Announcement That Buybacks are Occurring

           As the price of Wonderland’s currency (wMEMO) continued to fall, the team instituted buybacks. A strategy of DAOs to prevent their coin from falling under a specified backing price. The team used treasury funds to buy tokens from the open market and drive up the price. This effort was initially successful, and the price saw a small recovery. However, market conditions had still not improved, and the price continued to move steadily down after the announcement.

Bail Out of Core Team Members

           Some investors used their wMEMO as collateral to borrow and buy more wMEMO. During the market runup where prices in all crypto projects were still going up, this strategy made many investors huge profits. However, as the price fell investor’s collateral was liquidated to cover their debts. Some members of the Wonderland team were approaching liquidation of their collateral. The Chief Financial Officer, Sifu, was one of these members until he received over $45 million in funds from the Wonderland treasury. The team initially said this was delayed compensation for past work done on the project that had gone unpaid. After Sifu left the team, it was revealed that the team believed the liquidation of his collateral would cause an even greater fall in the price of wMEMO. Prompting them to allow Sifu to withdraw the funds and secure his debt.

Conspiracy to Cause Liquidations

           After seeing that the buyback system at work several large investors allegedly colluded on a scheme to lower the price, and cause cascading liquidations. These liquidations would cause the price to fall drastically. They would then buy back in at the lower prices and wait for the buybacks to bring up the price again in an arbitrage strategy. This caused even greater decreases in the price and another 25% was lost overnight, even the founder of the project, Daniele Sesta, and the CFO, Sifu, had their collateral liquidated to cover what they had borrowed.

CFO is Identified as a Convicted Felon

           Within 48 hours of the price falling a self-proclaimed internet detective, @zachxbt, publicly revealed Sifu as Michael Patryn the co-founder of QuadrigaCX exchange, infamous for running off with $160 million in investors’ funds. He has also been convicted of several other crimes, including fraud, theft, and burglary. Needless to say, the Wonderland community was not happy to hear that their investments were being managed by such a person.

The End of Wonderland?

           After a community-wide vote, Sifu was removed from the project, but the damage was done. The faith that the community had in Wonderland was gone. The remaining investors voted to decide if the project should close and the treasury to be returned to the investors. In a David versus Goliath story the remaining community rallied and beat the whales in a narrow vote, 55% of investors decided to continue the project in some form. Despite confusing communication, Daniele Sesta and the team are looking for ways to move forward and are soliciting help from remaining investors. It remains to be seen if Wonderland can look past these events, grow from them, and return to their former glories or if this is the end of Wonderland.

Special Thanks to James Hinote for his research skills and experience which contributed greatly to this article.