Sifu, the pseudonymous treasury manager of troubled DeFi protocol Wonderland, has started to cash out his multi-million-dollar Ethereum (ETH) stash through crypto mixing service Tornado Cash, making it harder to trace.
Tornado Cash is an Ethereum-based tool used by crypto investors to hide the destination of their funds.
Blockchain security company PeckShield on Tuesday reported multiple transactions from an address that has been linked to Sifu. Some 1,000 ETH worth $2.76 million was sent from the address sifu.eth to Tornado Cash.
Earlier, the same address transferred around 2,000 ETH in batches of 100 ether each to the coin mixer. In total, Sifu has so far cashed out more than $8.28 million worth of ethereum at existing market prices. At Press time, the wallet had a balance of 5,092 ETH or over $13.9 million.
Sifu used Tornado Cash for ‘privacy’
“Nothing stolen. Evidence on chain,” said Sifu of the transfers. The man was revealed last Thursday as Michael Patryn, co-founder of failed Canadian crypto asset exchange QuadrigaCX. A former convict who did time for bank fraud in the United States, Sifu saw the funny side of PeckShield tracking his wealth.
“Amazing. Alerts for my own money,” he scorned. And when someone asked Sifu to explain the source of his wealth, “how [it is that] a normal taxpayer could make $50 million within a single month?”, he replied:
Track my wallet. You can see exactly how I farmed and traded my way from $5 million to this point in two years. Involves spending your days filtering over 100 Discord groups, surviving rugs like Pickle and Cover, and some lucky directional positions.
While Sifu has not been accused of wrong doing at Wonderland, his decision to make use of Tornado Cash, a tool often leveraged by criminals in the cryptocurrency industry to launder cash, beggars belief. Sifu’s history of financial fraud appears to be a concern for many people in crypto.
He sees it differently, though. Sifu said he used Tornado Cash for “privacy”, adding that: “If you lost funds due to my liquidation: I have donated more than enough to the [Wonderland] team to cover those. You will be compensated.” He did not mention how much he had donated.
TIME, the native token of Wonderland, tanked as much as 40% after the identification of Sifu as Patryn. The token has slumped more than 95% from its all-time-high. Several people who had opened leveraged positions were liquidated, as a result.
Coin mixers no longer as private
Referred to as “mixing”, the service offered by coin mixers such as Tornado Cash is akin to the practice of “washing” of illicit cash common in the criminal underworld. This can be achieved say by buying legit pieces of art using proceeds of crime, which can later be sold on the open market legally.
“Mixers were supposed to be the solutions for anonymity, but in fact they just created another category of ‘suspected money source’,” Michael Pearl, chief operating officer of decentralized applications platform Kirobo, told BeInCrypto.
“Analytics firms, like Chainalysis and PureFi can identify crypto coming from mixers and are flagging them. I think that those mixers, in their current form, no longer provide users with the anonymity, while adding another reason for regulators and institutions to be weary of accepting crypto,” he added.
Daniele Sestagalli, the disgraced co-founder of Wonderland, has since announced that he is shutting down the platform.
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Source: https://beincrypto.com/funds-are-sifu-wonderlands-controversial-treasury-chief-washes-8-3m/