Cryptocurrency Trading Company Rises Thanks to LUNA and FTX collapse: Revenues up 1,000x in 3 years, ambitions to replace FTX

In 2017, Wintermute was founded by Evgeny Gaevoy, Yoann Turpin and Harro Mantel. In 2018, Wintermute was still a small company with less than $1 million in revenue. But by 2021, Wintermute has become a crypto giant with a trading volume of $1.5 billion in 2021.

According to CryptoSlate, the company’s path to wealth is built with careful trading strategies, low margins, and a little luck. In his Forbes profile, Evgeny Gaevoy, co-founder and CEO of Wintermute, describes the company’s growth as parabolic.

The company’s co-founders profited by using arbitrage algorithms to buy a cryptocurrency on one exchange and quickly sell it on another. Wintermute has traded on 30 centralized and dozens of decentralized exchanges, and traded over 350 different tokens.

This gives Wintermute great visibility into the market, allowing it to spot unseen opportunities – most notably in Terra trading.

Revenue increased 1,000 times after 3 years

Since February 2021, Gaevoy has begun to have doubts about Terra’s algorithm surrounding stablecoin TerraUSD (UST). UST’s $15 billion in circulation has become the main focus of Wintermute.

Gaevoy and his wife Marina Gurevich spent a month planning and integrating the company’s trading system with Terra’s blockchain technology. Wintermute has its servers set up and running Terra nodes to get a live view of UST trading and pricing.

In early May 2021, when the price of UST fell to just $0.98, Gaevoy asked his team to work extra day and night to get ready for this ambitious arbitrage strategy.

Then, Wintermute bought UST for 0.8 USD and exchanged it for LUNA for 1 USD. LUNA was then quickly sold at a profit of 10-15% per transaction, much higher than the 2% rate the company used to apply.

According to CryptoSlate, when UST almost lost all of its value, Wintermute traded over 250 million UST at a price of 0.1 USD and made tens of millions of USD in profits. Many other sources said that Do Kwon, the founder of Terraform Labs, lent Wintermute millions of dollars to maintain the account when he realized the company’s transaction volume was too large.

” Gaevoy didn’t cause Terra’s death spiral, but fueled it by being a collector of UST while everyone was rushing to liquidate it, ” commented Gaevoy and Wintermute on Forbes.

With only 53 employees, in 2021, Wintermute’s revenue reached $ 1.05 billion in revenue and profit reached $ 582 million.

Ambition to replace FTX

Unlike 2021, Wintermute’s 2022 is more difficult when interest rates, inflation are high and the prices of digital currencies are all falling.

In the first 9 months of 2022, Wintermute’s revenue reached $ 225 million, a sharp decrease compared to the same period in 2021. Besides, the company was hacked $ 160 million due to a wallet security error.

When the world’s second largest cryptocurrency exchange FTX declared bankruptcy in November 2022, Wintermute also had $59 million locked on the exchange and Gaevoy claimed to have lost all of this money. In December, the company consolidated most of its holdings into three centralized exchanges, Binance, Coinbase, and Kraken.

Gaevoy adds that the company is trading around $1 billion a day, down from $3-5 billion last year. In 2022, the company will not be profitable but the Wintermute founder remains very optimistic about the company’s financial situation.

According to CryptoSlate, Wintermute became the largest market maker in the crypto space after the FTX disaster. With $400 million in equity and $720 million in assets, the company can survive the current harsh winter.

The company’s co-founders said that they are continuously working to prepare to launch a derivatives exchange that caters to professional traders, in order to fill the gap left by FTX.

But Gaevoy claims to take a different approach from FTX when it comes to storing and managing customer funds, allocating them to external custodians.

“ We know they are a bit reckless and bet big, but honestly we can’t imagine how stupid they are in their management and trading decisions, ” Gaevoy said.

References: CryptoSlate, Forbes

 

The information about cryptocurrencies in this article is not investment advice. In Vietnam, cryptocurrency investment is not recognized and protected by law. Cryptocurrencies always carry many financial risks.