Anonymous Crypto raises alarm

For months, cryptocurrency enthusiasts poured hundreds of millions of dollars into a project called Wonderland, which it claims provides a revolutionary platform for a dramatic world of financial insecurity.

To join the project, investors – calling themselves the Frog Nation – handed over their money to the Wonderland financial manager, a crypto developer they knew only by the 0xSifu profile name.

In late January, 0xSifu revealed the name of Michael Patryn, who served 18 months in a federal prison for fraud. The price of the Wonderland token, $ TIME, fell overnight as panic-stricken Frog Nation closed the project.

“I felt like, ‘Oh, man, this is going to be bad,'” said Brad Nickel, an investor in Wonderland and Florida who runs a podcast project “Mission: DeFi.” “Immediately, that’s completely unreliable.”

From its inception, the crypto industry was built anonymously. Bitcoin was invented more than a decade ago by a mysterious scientist who went through the pseudonym Satoshi Nakamoto. For years, thieves and drug dealers used cryptocurrencies to trade under the shadows.

The ability to work anonymously is a key crypto technology. All cryptocurrency transactions are recorded on blockchains, which allows users to interact anonymously, without registering with a bank or with a security guard tradition associates.

Now that crypto is evolving into an expanding industry, even right-wingers – startups, engineers and investors – insist on anonymity. An increasing number of crypto entrepreneurs, many of whom control hundreds of millions of dollars in investing funds, are trading through in-depth internet avatars wiping out information. Some ventures companies support manufacturers who do not really know their name.

But the imminent fall of Wonderland forces us to reflect on this anonymous culture questioning and aiding fraudsters. Last month, BuzzFeed News sparked a new controversy by discovering two of the founders of Bored Ape Yacht Club, a $ 2.5 million collection of free-to-air tokens, a unique digital collection known as NFT.

“This pseudonymous thing is very dangerous,” said Brian Nguyen, a crypto entrepreneur who used a pseudonym last year before revealing his identity in public. “They may be a good actor today, but they could change in two or three years.”

Mr. Nguyen once discarded more than $ 400,000 in a common crypto scam called rug pull, owned by an anonymous developer, asking for money from investors. and went away with the money. Plastic bag trailers are often left with little means against anonymous thieves.

Nonetheless, some of the company’s most powerful companies have embraced that crypto engineers and startups often prefer to work anonymously. The publishers of Crypto argue that this creates an equitable market, in which entrepreneurs are judged by their technology rather than by their education system or family. Blockchain provides a public record of the business, allowing visual observers to evaluate the maturity of an anonymous and unscrupulous entrepreneur.

Amy Wu, the leading arm of the FTX cryptocurrency exchange, said he sometimes interacts with anonymous investors. One got up and just ran Elon Musk parody Twitter account which now has almost two million followers.

“I do not know who he is. I do not know the company he worked for, “Ms. Wu said.” I also don’t need to.

Last year, FTX brought the user to the Twitter pseudonym Solana’s story to advise clients of companies interested in NFT. An FTX employee who introduced the New York Times to SolanaLegend, who in an interview declined to give his real name, said he did not want to be named to protect his privacy. When identifying who he really was during his first call with FTX supervisors, he said, his company email address reflected his pseudonym, which he chose as a joke.

In the workplace, it makes one thing different in secret. In his calls to clients, he often introduces himself with his first name, thinking that traditional business leaders may not be comfortable working with someone known as Legends.

Over the past year, Paradigm’s headquarters has also hired anonymous engineers and researchers; they appear on the pages of company employees under pseudonyms. The most recent loan was a crypto engineer who went through Transmissions11 and went to high school “during his free time,” according to his company bio. (Jim Prosser, a spokesman for Paradigm, said staff executives know their identities.)

In interviews, crypto entrepreneurs and anonymous engineers gave several reasons for hiding their names. Some fear that law enforcement could put them at risk of lawlessness. Others said that they did not like the attention or were worried that their growing economy might make them more vulnerable to burglars and thieves.

Anonymous entrepreneurs often go to great lengths to keep their identities private, use software that changes voice and calls or requires business partners to sign anonymously.

Some venture companies are willing to invest in them anyway. Last year, 0xMaki, the developer that helped launch the popular crypto operating system SushiSwap, raised $ 60 million from a group of business investors, including Ms. Wu, without letting them know his name. (The deal fell through when members of SushiSwap – a so-called independent company, or DAO, which is heavily influenced by individual investors – raised concerns about the money. )

Last summer, the anonymous founder of Alchemix, another major crypto service, raised $ 4.9 million from a trading company run by CMS Holdings. Dan Matuszewski, the founder of CMS, said he never asked the chief of staff, who used the pseudonym Scoopy Troople, to reveal his identity.

“A lot of these guys have a good reputation over the years,” Mr. Matuszewski said. “It doesn’t seem fair to them to run away and escape the money.”

But for many people, it can be difficult to verify the credentials of an unknown manufacturer working under a pseudonym. Anonymous startup a crypto platform called AnubisDAO raised nearly $ 60 million in just a few hours last year; Less than a day later, the fund closed at its second-largest level of 2021, according to blockchain-tracking Chainalysis.

“No one is finally investigating,” said Jordi Alexander, chief investment officer at crypto trading company Selini Capital. “You have anonymous people on the internet right now. Sometimes they become deceivers.”

These days, crypto investors often use their real names to advertise their startups as “completely doxxed,” meaning their background is public. And manufacturers find it difficult to hide their identity. BuzzFeed searches public records to identify the founders of Bored Apes, Greg Solano and Wylie Aronow. (They did not respond to a request for comment.)

Wonderland was founded in September by Daniele Sestagalli, a crypto entrepreneur who managed the project with Mr. Patryn, using a spectacular video from “Alice’s Adventures in Wonderland” to entice investors. In a January blog post, Mr. Sestagalli said he had known since December that Mr. Patryn had been a fraud but had decided not to take action because he believed it was a “second chance.” (Mr. Sestagalli did not respond to a request for comment.)

Its entrepreneurs are less forgiving. Like SushiSwap, Wonderland runs as DAO. After her husband died in January, Patryn was reunited with her fiancé. (He did not respond to emails.) The second election resolution calling for Wonderland to close was a resounding success.

It may be that Mr. Patryn is secretive if not for the work of the crypto sleuth influenced, who. screen shot tweeted of his written conversation with Mr. Sestagalli. Of those messages, the founder of Wonderland appeared to be accepting the real 0xSifu name.

Last month, sleuth was in it again. evidence tweeting and the Securities and Exchange Commission sanctioned an anonymous leader of another crypto service.

Aha sleuth? I do not know. It uses the pseudonym name.

Eric Lipton helped with the complaint. Kirsten Noyes helped with the analysis.

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