[RFC] - Proposal to liquidate the Wonderland Treasury & reimburse holders
- In favour of the wind-up and liquidation
- Opposed to the wind-up and liquidation
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Name: [RFC] - Proposal to liquidate the Wonderland Treasury & reimburse holders
Scope: This RFC seeks to create a detailed plan-of-action for the winding-up of the Wonderland Treasury fund. Liquidated funds are to be used to reimburse holders of wMEMO/TIME. The liquidation essentially dissolves Wonderland, and brings the project to a close.
Sentiment indicates overwhelming majority in favour: [DAO Discussion] - [Proposal: Reject Merger & Reimburse wMEMO/TIME holders using Treasury Funds]
Link to DAO Discussion: Proposal: Reject Merger & Reimburse wMEMO/TIME holders using Treasury Funds
Objective: To most effectively liquidate the Wonderland Treasury into stable-coins across all networks and protocols.
Background:
The Wonderland project has been rocked over the past 24 hours by news that their treasury fund is being managed by a convicted felon, who plead guilty to a variety of major white-collar crimes. Most significant of these are: credit card fraud, coordinated identity theft at scale, securities fraud. Other convictions include burglary, and grand theft auto.
Link to detailed article relating to convictions: Omar Dhanani – Amy Castor
Daniel Esesta, the founder of Wonderland and other major DeFi projects, admitted to being aware of these convictions for at least a month due to an investigation by a DeFi twitter.
Link to confirmation by Dani on Twitter via a private DM exchange: https://twitter.com/zachxbt/status/1486591682728673282?s=21
Despite being aware of these convictions, Omar Dhanani (known as @wSifu in the Discord of Wonderland) was left in charge of the treasury fund, during a period where the market cap of Wonderland declined in excess of 70%.
Many serious questions remain unanswered:
- How did Dani come to meet Omar Dhanani?
- Has Omar been material funder for any other projects?
- Were the source of his funds never questioned?
- On what credentials/experience was Omar hired to manage the treasury of the Wonderland project?
- A history of securities fraud and wealth mismanagement is a material piece of information any rational founder would disclose. What was your rationale for hiding it. Giving people a ‘second chance’ is not a good enough reason.
- Was the information regarding Omar’s convictions made available too anyone else? Has this been what sparked the sell-off over the past 4 weeks? Seems to coincide nicely with when Dani became aware of this information for the first time.
Perhaps we will never get answers to these questions. As it all boils down to here-say, and what people admit.
This proposal believes that there can be no meaningful future for the Wonderland project, based on several factors:
- Wonderland community sentiment
- DeFi sentiment towards Wonderland, and the leadership team
- The unrealistic prospect that early investors can be made whole through utilisation of the treasury funds
This proposal will outline facts, in regards to its objective below. All facts are evidenced using best possible available sources (Discord messages, Twitter threads, charts etc.)
Fact 1: Sifu, also known as Omar Dhanani, is not a legendary treasury manager.
He never has been. He is a convicted felon who served time in a federal prison for securities fraud, credit card fraud, and mass identity theft.
Does he understand, in detail, the mechanics of defi, and cryptocurrency. Absolutely he does. He no doubt has a master level understanding of the industry. Unfortunately, this is most likely what makes him so dangerous. Bernie Madoff had a detailed understanding of the environment he operated in as well. It is this detailed understanding that allows securities criminals to conduct, and get away with scams.
You will not pull-off a $100m+ scam if you don’t know what you are doing.
Evidence link 1: Omar Dhanani – Amy Castor
Evidence link 2: Quadriga Fintech Solutions - Wikipedia
Evidence link 3: https://www.reddit.com/r/defi/comments/sdsp3e/holy_mother_of_god_sifu_of_wonderland_is_michael/
Fact 2: The price of wMEMO has collapsed 77% since Dani was aware of Sifu’s conviction
Assuming an exact 1 month period has passed since Dani found out about Omar’s convictions, the data points would be as follows:
Price of wMEMO on the 27th of December, 2021: $130,376
Price of wMEMO on the 26th of January, 2022 (prior to news being available): ~$33,000
Price decline of wMEMO: 74.6886% decrease
Price decline of BTC/USD over same period: 28% decrease
For evidence, see price chart of wMEMO here: DEX Screener
Fact 3: A merger with Abracadabra was proposed which would essentially dissolve Wonderland, anyway.
The sale price of 98bn SPELL tokens for the entirety of the Wonderland treasury would be classed as the acquisition of a distressed business in the M&A world.
The purchase price equated to just shy of $800m, when the treasury balance value was around $850m.
The underlying assumption of pricing and valuation being that the Wonderland assets are likely to be worth less in the future, than they are today. Hence the discount.
The acquisition of any successful business in the TradFi world usually involves a premium over the book value of the business - being Net Asset Value. This premium is justified due to the forecasted increases returns from assets, over and above present day value.
The messaging from Dani & Sifu that the Wonderland treasury is thriving, while pushing an acquisition deal with implies Wonderland is a distressed business, is simply not congruent. The deal essentially let them sweep Wonderland under the rug, and utilise the treasury balance for the larger SPELL holders - not only Wonderland holders.
Fact 4: The DeFi community, and key influencers within it, are actively disavowing Sifu, and the Wonderland project.
A major point of hope for the remaining Wonderland holders was that Sifu’s ability to manage the treasury, coupled with Dani’s standing in the DeFi community would be enough to achieve a possible 8x, 10x or other double digit multiple on the price of wMEMO. This would essentially bring investors back to break-even, and profit on their holdings.
This would have only been achieved through the following levers:
- A large amount of new investors joining Wonderland
- Triple digit ROI from investments into early stage DeFi projects
Neither of these two scenarios seem plausible given the community sentiment towards Wonderland, Sifu, and Dani. The standing of the project has been poisoned, and is likely irreversible.
Evidence link 1, @AndreCronje: https://twitter.com/AndreCronjeTech/status/1486607111094255622?s=20
Evidence link 2, @tetranode: https://twitter.com/Tetranode/status/1486613555881336835?s=20
Possible mechanics of liquidation, and reimbursement
The current Wonderland treasury fund has a value of $809,734,581.81
The current market cap is $382m.
So theoretically, if trading was frozen, treasury assets were liquidated, and funds reimbursed proportionately to holders of wMEMO, each holder would receive the backing price of $40,738.
Is it a huge loss for many early investors? Yes. Is it better than the prospect of a price collapse of wMEMO to below $10k in coming weeks? Yes, it is.
I am no expert as to the technical details of this.
If anyone has any recommendations as to how best to unwind the treasury fund into stable-coins, your feedback is welcome.
Concluding statements:
It is acknowledged that Wonderland was always a high-risk play. No one is disputing that.
This proposal simply seeks to reach a consensus on how the $700m treasury fund is used, in light of revelations about the project leadership, and in light of extreme headwinds which will be faced in growing the project.
Community sentiment overwhelmingly suggests a loss of faith in leadership. Leadership essentially being two people. Daniel Esesta, and Omar Dhanani.
This is not meant to be an indictment of Dani’s visionary skills in the DeFi world. It is simply the community wanting the Wonderland nightmare to be over.
Freeze trading, unwind all positions, and liquidate the treasury, Use funds to then reimburse remaining holders of Wonderland on a proportionate basis.
Since an RFC is a “work in progress” Proposal, not all of these points need to be filled out from the beginning. They can be added over time as the RFC evolves into a mature Proposal.