- Terra’s native luna token fell 10% on Monday after trouble at a decentralized finance network sent ripples across the ecosystem.
- A top executive at DeFi platform Wonderland was revealed to have links to a failed crypto exchange.
- Most cryptocurrencies were in the red on Monday, with altcoins such as polkadot and avalanche down sharply.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Terraform Labs’ luna token fell by almost 10% on Monday, after popular decentralized finance platform Wonderland was enveloped in scandal when one of its top executives was revealed in recent days to have been involved in one of the biggest ever crypto frauds.
Luna was last down 7% over the last 24 hours at around $46.52, having lost over 22% over the past 7 days, according to CoinMarketCap data.
The rout started over the weekend, when a Twitter user revealed that Michael Patryn, known anonymously as “Sifu“, was managing Wonderland’s treasury. Patryn gained notoriety previously as a cofounder of the failed Canadian crypto exchange QuadrigaCX, which went down as one of the biggest crypto scandalsin history in 2019. And before that, he was involved in money scams, fraud, and burglary.
Wonderland has described itself previously as the “first decentralized cross-chain reserve currency protocol on the TIME token.”
Serviced on the Avalanche blockchain network, the DeFi platform offers yields of 83,000% for investors who lend crypto into the basket of assets backing its native token. According to its website, Wonderland’s treasury balance is nearly $675 million, and there are over 820,000 TIME tokens staked.
With the network in turmoil, any associated crypto coins tumbled, including luna. The Terra network is used to link to Abracadabra, which is co-founded by Danielle Sestagalli, who also co-founded Wonderland. Users of Abracadabra can stake Terra’s UST stablecoin to borrow Magic Internet Money, or MIM, which is another US dollar-based stablecoin.
Even though Patryn has since stepped back from his position, the damage has already been done, with Sestagalli tweeting that the Wonderland project is coming to an end.
“I do not agree about continuing this experiment, I am working with the team on a new proposal,” Sestagalli tweeted on Sunday.
The crypto market has been in a downtrend since the start of the month, which means events that go beyond pure market forces are having more of an impact, analysts said.
“Alongside the broader crypto market, it’s been a bearish start to the year, however. For the current month to Friday’s close, LUNA was down 41% to $50.45. While the broader crypto market has struggled in January, influences beyond crypto market forces have contributed to the pullback,” analyst Bob Mason of FXEmpire said in a note over the weekend.
Most of the cryptocurrency sector remained in the red on Monday, with bitcoin was down 2.8% on Monday at $37,054 while ether, the native toke of the ethereum network, was down 3.6% to $2,536, according to CoinMarketCap. Polkadot’s dot and avalanche’s avax tokens were both down by around 7% over the last 24 hours.