Rapture #124: Pseudonymous Founders will not Last

Rapture #124: Pseudonymous Founders will not Last

I love crypto. I have been here since 2016. I love the memes, I love the irreverent culture, and I love the values of decentralization it was founded upon.

While I deeply love this industry, I do aknowledge there are serious issues with some of the cultural norms we have. For example, I do not believe that test in prod is productive for the long term success of the industry, as consumers getting exploited is bad for everyone.

Furthermore, I do not believe in creating a norm where pseudonymous founders get a carte blanche on all their activities, especially when they are the operators large projects.

Wonderland Co-Founder Linked to QuadrigaCX Exchange

In the past 24 hours, it was discovered that the pseudonymous founders of popular crypto Avalanche project Wonderland, Saifu, was actually the co-founder of QuadrigaCX, Michael Patryn, who has been to jail for multiple crimes. For those of you who do not remember, QuadrigaCX was the infamous exchange that collapsed with the withdrawal of $169 million and the mysterious disappearance of its other co-founder, Gerald Cotton.

Interestingly, Sifu was voted to continually manage the $100 million+ treasury as recently as December, though a new vote was proposed to remove him and it looks like it will pass with flying colors.

Just a quick refresher, Wonderland is one of the infamous OlympusDAO forks, just for the Avalanche blockchain.

Of course, the treasury of Wonderland at the end of the day is being controlled by  a multi-sig, meaning that there are supposedly protections in place that protect any one individual absconding off with the entire treasury.

Crypto Twitter has been ablaze over the controversey, and it crystallizes many of the issues of having anonymous founders.

Active Pseudonymous Founders set bad Precedents

While I love the ethos of crypto that anyone can make it, it makes absolutely no sense to have a precedent of pseudonymous founders who remain active in the project. Fraud is already rampant without a founder being pseudonymous, how much more rampant do you think it would be if we embraced every founder being pseudonymous, especially with the borderless nature of this asset class?

For crypto actually to be a mainstream asset class in terms of adoption and utility, there needs to be individuals who are held accountable for their actions if they act purposefully in a nefarious way. If I eat a candy bear, and it was poisonous to the point of permanently damaging me, the entity that made the candy bar would rightly be held accountable.

Pseudonymous founders are much more difficult to keep accountable from both a legal and reputational stand point. I understand the perspective that many of these founders are operating within a regulatory gray area and thus want to remain anonymous, but currently they are appropriately compensated for that risk they take as the liquidity event for tokens comes much earlier in the project's cycle than traditional companies.

Yes, Satoshi was pseudonymous, but Satoshi left Bitcoin shortly after its creation and also did not have significant single handed control over the development once live.

We need to change the cultural norm of accepting pseudonymous founders into one of accountability.