Frog becomes F "rug", a tweet sparked a billion-dollar scare

Original author: 0x137, Rhythm BlockBeats

Recently, two pieces of information on Twitter about the former CFO of Frog Nation have spread throughout DeFi and even the entire currency circle. As CFO, 0xSifu not only holds the treasury power of Wonderland, the largest DeFi 2.0 protocol, but also has a huge impact on the income of other Frog Nation ecological protocols, involving more than one billion US dollars in funds. After the news that 0xSifu was involved in fraud came out, it also pushed Frog Nation, which was at a critical stage of development, into a fire pit.

first level title

Breaking news in the wee hours: CFO accused of fraud on multiple occasions

In the early hours of the 27th Eastern Time, Daniele, the founder of Frog Nation, tweeted: "Today's allegations about our team member 0xSifu will spread widely. I want everyone to know that I know about this matter, but I don’t think a person’s past can determine his future. I value the time I spent with him before knowing who 0xSifu is.”

A minute later, zachxbt published his chat records with Daniele on Twitter, confirming that 0xSifu had been involved in fraud crimes many times.

As Omar Dhanani, 0xSifu ran an identity theft ring called Shadowcrew in 2005, specializing in cybercrime such as credit card theft, identity theft and other Ponzi schemes. He also ran another Ponzi scheme himself called Midas Gold and ran away with the money. Soon after, he was arrested and imprisoned in the United States along with six other Shadowcrew accomplices.

After being released from prison, 0xSifu went to Canada again under the pseudonym Michael Patryn. In 2018, he co-founded the cryptocurrency exchange QuadrigaCX in Canada with Gerald Cotten. This exchange is also a Ponzi scheme, Cotten and "Patryn" will use the deposits of new users to pay the withdrawals of old users, so that everyone's withdrawals will be trapped for weeks or even months later.

Today, Daniele, founder of Frog Nation, appointed 0xSifu as his CFO, handing over nearly $800 million in the Wonderland treasury to the ex-convict. Of course, 0xSifu's own assets also increased by as much as 10 times during this period.

first level title

events at critical moments

All key Frog Nation Tokens took a big hit following the news of 0xSifu. Wonderland's TIME dropped 30%, trading from around $500 to $370, while Abracadabra's SPELL dropped 15%, from $0.007 to $0.006. However, the impact of this exposure on Frog Nation’s ecology is far more than just the impact on Token prices.

Recently, Frog Nation is at a critical development point, and several plans related to the ecological future are advancing at the same time. If all goes well, Frog Nation will be an unrivaled "DeFi gangster":

secondary title

Merge Abracadabra and Wonderland

This new VC mechanism has been tested on Wonderland's new Token wMEMO. Just some time ago, Wonderland has finalized the key investment in Wormhole, a cross-chain bridge project. This investment will make MIM the preferred stablecoin of Wormhole. The vision of a stable currency. And wMEMO holders will be able to get Wormhole airdrops.

secondary title

Merge Sushi Swap

In a recent blog post, Daniele stated that the Frog Nation team will take over SushiSwap to help clean up and restore Sushi's efficiency, making it part of the Frog Nation ecosystem.

Needless to say, one of the factors driving this merger is the community's trust in Daniele and the Frog Nation team.

secondary title

Seize the development opportunity of ve(3,3)

Daniele revealed in a previous AMA that he was negotiating with the Convex team to give MIM a competitive advantage in Convex War. This makes sense why Daniele wants to cooperate with AC on the new AMM project Solidly (previously known as ve(3,3)). "It is mentioned in the article that Solidly is like Curve on Fantom, the more agreements that hold Solidly Token, the greater the incentive voting power.

When the ecological development is at such a juncture, any mistake of the team may have a ripple effect within the ecology, bringing unimaginable consequences. Everything seemed to be going smoothly, but at such a critical juncture, the principled mistakes of the top team were exposed, directly shaking the foundation of Frog Nation's development and everyone's belief in its prospects.

secondary title

MIM stripping

Soon after the news of 0xSifu was exposed, the ripples spread to Abracadabra. On the morning of the 28th, a large number of users began to exchange their MIM for 3CRV through the MIM-3CRV liquidity pool on the Curve platform, which seriously skewed the proportion of assets in the pool. Eventually, less than 5% or so of 3CRV remained in the entire pool, and the MIMs began to unravel. At the time of writing, MIM/DAI is trading at $0.98, but is still unhinged.

What's worse, many people can't get 3CRV directly from MIM-3CRV, so they exchange MIM to UST first, and then use UST to exchange 3CRV, which forms the selling pressure on UST, and implicates the price of LUNA to start to go down.

This is a huge blow to MIM, which aims to become the cross-chain stablecoin with the highest adoption rate. Although Wormhole will be supported in the future, users' trust and demand for its anchoring ability will be difficult to recover in the short term.

secondary title

Concerns from partners

In addition, AC also expressed his dissatisfaction on Twitter. He wrote: "Do things with principles. A long-term history of fraud, theft and malicious behavior is not a "mistake", but a clear intention.. .Letting 0xSifu manage funds, especially users' funds, is negligent enough... I just want to get off Willy Wonka's magic wagon right now. "

Now, the image of the Frog Nation team in the community has taken a turn for the worse, and many people call it "F(rug) Nation". Coincidentally, Yearn Finance also planned to merge with Sushi before. After this incident fermented, some members of the Sushi community proposed to abandon Frog Nation and join Yearn again. If something like this happens, Frog Nation will really be in trouble.

first level title

DeFi magician or boiled frog?

As one of the soul figures of Frog Nation and even the entire DeFi field, Daniele enjoys a very high reputation. It must be admitted that he was indeed an excellent DeFi magician before: the Abracadabra platform played the role of various earning assets well and promoted the development of the Frog Nation ecology.

But after the news of 0xSifu was exposed, the fire in the backyard also burned on Daniele himself, and discussions about whether Daniele was suspected of "boiling frogs in warm water" also surfaced.

Not long ago, a large-scale liquidation occurred in Wonderland, causing the price of the native Token TIME to plummet from $800 to $360 within a few hours. Someone found that the trigger of this liquidation seems to be inseparable from Daniele and 0xSifu.

Before the large-scale liquidation occurred, team members such as Daniele and 0xSifu used Wonderland’s new Token wMEMO as collateral to lend a large amount of MIM, and transferred these stablecoins to the Bitfinex exchange, which actually meant that the team did not actually sell wMEMO "Cashout" is performed below.

This massive liquidation may have been triggered precisely because of the liquidation of borrowings related to the team. However, during the entire liquidation process, none of the team members responded, and the agreement repurchase that should have been in place did not happen, which caused the Token price to fall below the endorsement price and wiped out the investment of many users. In fact, it was a soft rug pull .What's even more frightening is that this is not the first time that this kind of thing has happened. When DeFi 2.0 generally plummeted before, TIME had already fallen below the endorsement price. Similarly, the team did nothing about it, and the endorsement price also kept falling along with the Token price. Rhythm editor in"TVL plummets, is DeFi 2.0 really cool?" "

This is also mentioned in the article.

And now, although the authenticity of the news has not been confirmed, rumors about the relationship between Daniele and Bitfinex have also begun to ferment.

At present, 0xSifu himself has responded to this matter, expressing his willingness to accept the final decision of the community.