Original Article Title: "The Secretive Market Maker: A Crypto Market Maker's Rollercoaster Journey"

Original Article Author: 1912212.eth, Foresight News

Rock singer Cui Jian once sang in "Fake Monk": "I want everyone to see me, but not know who I am." In the ever-changing crypto market, there are many such "characters" who attract the curious eyes of countless people.

In 2017, a young man left Wall Street, used his savings to mine, read whitepapers, stayed up all night tweaking algorithms, and brought on board two colleagues from globally renowned market-making and high-frequency trading firm Optiver: one skilled in trading architecture and one expert in risk control. The brutal test of the 2018 bear market killed off many exchanges, projects, and media outlets. In the most difficult times, with no external funding, they could only rely on personal belief and algorithmic models. It wasn't until the global financial markets experienced drastic volatility due to the pandemic that their arbitrage algorithm made them $120,000 overnight. Months later, they began seamlessly arbitraging across multiple exchanges.

A year later, the once-unknown team behind him was managing funds worth hundreds of millions of dollars, with countless trades executing significant volumes under his algorithmic design. He became the kind of character who "you can't see, and you don't know who he is," yet you can always feel his presence in the prices of trades.

He is Evgeny Gaevoy, the founder of Wintermute, currently one of the world's largest algorithmic-driven crypto market makers. He lives in London and enjoys traveling to the United States. He enjoys using memes in his posts, is straightforward in his speech, and even retorted to market manipulation allegations with, "If you take me as your imaginary enemy, don't blame me for firing back at you."

So what exactly is the role of a crypto market maker?

Typically, if a project issues a token, they can list it on a DEX, with the general process being to create a trading pair on the DEX, such as X/ETH or X/USDT, then inject two assets to form the initial liquidity pool, such as 1 million X tokens and 100 ETH. However, when the project wants to list on exchanges like Coinbase or Binance, they cannot just release the token and expect people to trade because they often face the dilemma of insufficient trading volume. These exchanges need to ensure liquidity in trading. This means there must always be someone willing to buy and someone willing to sell. Typically, market makers take on this role.

Compared to exchanges and crypto VCs frequently discussed in public, liquidity providers have been shrouded in mystery. In the crypto industry, they hold a significant position but are sometimes also the driving force behind token price drops, hence causing controversy.

Old Order Crumbles

The crypto market saw an influx of professional liquidity providers since the last cycle.

Back then, the market was dominated by established institutions such as Alameda Research, Jump Crypto, and Wintermute. These players, leveraging high-frequency algorithmic trading and substantial funds, controlled the liquidity supply on CEXs. Alameda, as FTX's sister company, provided depth for major assets like Bitcoin and Ethereum during the 2021 bull market peak, with its trading volume accounting for over 20% of the market's total volume at one point.

Alameda Research, as a frontline liquidity provider in the crypto space, saw its downfall begin with its sister company FTX's liquidity crisis. In November 2022, CoinDesk exposed Alameda's balance sheet, prompting CZ to announce the sale of all FTT tokens, leading to a liquidity drought at FTX and a user run on the platform. Investigations revealed that FTX had misappropriated customer funds amounting to as much as $10 billion to lend to Alameda for high-risk trading and loss coverage, creating a fatal cycle. FTX, Alameda, and over 130 affiliated entities filed for bankruptcy, and SBF stepped down as CEO.

Looking back at its glory days, SBF founded Alameda in 2017, initially focusing on crypto arbitrage and quantitative trading, quickly rising to prominence with its algorithmic advantage. After launching FTX in 2019, Alameda became its primary liquidity provider, helping FTX achieve a valuation of $32 billion. With assets under management totaling billions of dollars, Alameda made substantial profits through leverage trading and market-making during the bull market, turning SBF into a crypto billionaire and driving industry philanthropy and regulatory advocacy.

Caroline Ellison

The ultimate collapse stemmed from internal governance failure, with Alameda partner Ellison admitting to misusing customer funds at an employee meeting, shocking the industry. Her romantic relationship with SBF added more drama: in 2023, as a key witness for the prosecution, she accused SBF of orchestrating an $8 billion fraud, while pleading guilty to seven fraud charges herself and receiving a two-year prison sentence in 2024. In court, she tearfully apologized, saying, "I feel heartbroken every day for the people I've hurt."

Alameda's high leverage exposed it to market volatility, and FTX's client funds were used in unauthorized lending to fill the gap. In 2023, SBF was sentenced to 25 years in prison, Alameda's assets were liquidated, marking its complete collapse.

The exit or contraction of established market makers was the direct cause of the vacuum period that emerged.

According to Kaiko data, a week after FTX's collapse, global crypto liquidity was halved, with Bitcoin's 2% depth dropping from hundreds of millions of dollars to less than $100 million.

In the early battlefield of the crypto market liquidity, Jump Crypto and Wintermute were also once the two hottest forces.

Jump, born from the traditional high-frequency trading giant Jump Trading, entered the crypto market in a big way in 2021 with its deep algorithmic expertise and capital strength, ubiquitous from the Solana ecosystem to the Terra stablecoin system. However, with Terra's collapse and in 2023 Jump Crypto's business contraction due to investigation by the U.S. Securities and Exchange Commission (SEC), it withdrew from part of the U.S. market and laid off over 10% of its staff.

Wintermute rapidly rose with flexible algorithmic market-making and OTC business, becoming one of the most influential liquidity providers in the CeFi and DeFi fields. A hack in 2022 cost it nearly $160 million and exposed the risks behind its rapid expansion; thereafter, Wintermute gradually shifted towards refined operations, no longer blindly expanding.

The trajectories of the two almost condensed the entire process of the past five years of crypto market makers from wild growth to cautious contraction: from high-frequency arbitrage to ecosystem support, from aggressive risk-taking to prudent survival, market makers once supported the market's prosperity, but now have learned to balance between risk and liquidity.

However, at a time when the frontlines are shrinking and becoming more cautious, various factors, whether macro or micro, have once again led to the entry of new players. The Fed's rate cut in 2023-2024 stimulated capital inflows, and after Bitcoin's halving in 2024, the market cycle started. A new wave of token issuance emerged: NFTs, re-staking, meme coins, AI agents, stablecoin craze, RWAs, and on-chain equities took turns in the spotlight. In addition, U.S. spot ETFs also attracted a large amount of funds, and data performance was also very impressive.

According to SoSoValue data, as of August 28, Bitcoin spot ETFs had a total net inflow of $541.9 billion, while Ethereum spot ETFs had a total net inflow of $136.4 billion. The relaxed regulatory environment is also an important reason. Since Trump took office in January 2025, he has emphasized supporting responsible growth in digital assets, blockchain technology, and related technologies, and revoked the Biden administration's related policies. The order also established a digital asset working group within the National Economic Council to develop a federal regulatory framework, including market structure, supervision, consumer protection, and risk management.

In addition, the industry's technological barriers continue to decrease, and the needs of project teams are changing, prompting a reshuffle in the industry.

The Rise of New Stars

The significance of the vacuum period is to leave a huge space for new players. Representative players include Flow Traders, GSR's new division, and DWF Labs. The core team members have diverse backgrounds, and their business scope covers CEX/DEX market making, OTC, and structured products.

Flow Traders

Flow Traders, this globally renowned liquidity provider originating from the Netherlands, was initially known for Exchange-Traded Products (ETPs) but decisively shifted to the crypto field in 2023, as if a seasoned sailor caught the digital wave. The team has a deep background, consisting of a group of quantitative trading experts and financial engineers. They emphasize a "strong team-driven culture," and their Amsterdam headquarters resembles a sophisticated laboratory, bringing together elites from Wall Street and Silicon Valley.

Thomas Spitz

In July 2025, Flow Traders' newly appointed CEO, Thomas Spitz, took office. This former executive has had a brilliant career of over 20 years at Crédit Agricole CIB, holding various senior roles and possessing deep experience in international team management and cross-cultural leadership. He led the MiCAR compliance stablecoin, AllUnity, collaborated with DWS and Galaxy Digital to reshape the tokenized asset landscape.

In the second quarter of 2025, its net trading income reached 1.434 billion euros, an 80% year-on-year increase. In terms of market making characteristics, Flow Traders excels in cross-chain and institutional support, providing continuous liquidity. Currently, third-party data monitoring shows tokens including AVAX, LINK, DYDX, GRT, STRK, PROVE, WCT, PARTI, ACX, EIGEN, among others. It is worth mentioning that in mid-2024, Flow Traders also helped the German government smoothly handle confiscated BTC without causing significant downside risks in the secondary market.

Flow Traders expands profitably using proprietary funds and algorithms, while GSR obtains part of its funding through VCs such as Pantera Capital.

Monitoring data shows that its current market-making fund is $16.94 million, and its fund balance has dropped to the historical bottom range.

GSR Markets

GSR Markets is a Hong Kong-based algorithmic trading company. It leverages its own software to provide order execution solutions for several categories of digital assets, thus offering liquidity. The team has a diverse background, with members mostly being former hedge fund traders and blockchain engineers. With offices in New York and London, GSR gathers global talent to provide institutional-grade market-making, OTC trading, and risk management. GSR's market-making feature lies in precise risk hedging and global connectivity. They are connected to dozens of exchanges, providing two-way liquidity for buyers and sellers, excelling in high-frequency algorithms to cope with volatility.

In 2023, GSR scaled back U.S. trading to avoid regulatory storms, with key executives like the CFO resigning. In 2024, GSR transitioned from pure trading to an ecosystem partner. In 2025, at the Consensus summit, its partner Josh Riezman stated, "The integration of DeFi and CeFi is the future, and we are preparing for the next phase."

Riezman once mined Ethereum with his own server to accumulate his first pot of gold. His impressive resume includes years of experience at Deutsche Bank, Societe Generale, Circle, and other traditional and crypto institutions. Under his leadership, GSR became the first in the industry to simultaneously obtain licenses from the UK FCA (Financial Conduct Authority) and the Singapore MAS (Monetary Authority of Singapore) as a crypto liquidity provider.

Josh Riezman

According to publicly available information, GSR's market-making altcoins include: WCT, RNDR, FET, UNI, SXT, SPK, RSC, GALA, HFT, PRIME, ARKM, BIGTIME, USUAL, MOVE, BAN, TAI, PUFFER, ZRO, IINCH, ENA, WLD, and more. If you observe carefully, you will notice that some of these altcoins listed on Binance spot, the coins GSR makes the market for often experience a period of price increase after listing, rather than an immediate crash.

According to Arkham data, the market-making fund volume of its public address is $1.4376 billion. Its main market-making exchange is Binance. The fund balance remains at a moderate level.

DWF Labs

DWF Labs was founded in 2022, with Managing Partner Andrei Grachev coming from a traditional trading background, having previously served as the Head of Huobi Russia. At the age of 18, he entered the logistics industry and later transitioned to trading in the traditional markets in 2014. He then shifted to e-commerce and made a significant amount of money when ETH rose from $7 to $350, thus starting his journey into crypto.

He has 5 Chinese tattoos on his body. Under his leadership, DWF has been a subject of much market controversy, which the team takes pride in. Furthermore, DWF wears many hats, encompassing roles such as VC, OTC, incubator, ecosystem, fundraiser, event branding, TVL provider, DeFi Taker, advisor, listing agent, HR, PR/marketing agency, KOL, RFQ quote platform, and more.

Between 2023 and 2025, DWF invested in over 400 projects, totaling over $200 million.

DWF primarily focuses its market-making efforts on East Asian projects and various new and old sentiment-themed targets. Publicly available information indicates that DWF's market-making coins include SOPH, MANTA, YGG, IOST, JST, MOVE, CAT, MONKEY, ID, XAI, LADYS, among others. Interestingly, as of now, the official market-making address of DWF Labs holds less than $9 million.

New players often receive Web3 venture capital support or expand through trading profits. DWF Labs' self-owned funds have snowballed, making it the most active investment institution in 2023-2024. By 2025, its "venture capital + market-making + incubation" model had covered multiple narrative domains. These funding sources enable newcomers to quickly expand during the vacuum period, such as DWF Labs' investment in AI and RWA projects through its own capital in 2024, showing a significant snowball effect.

A more flexible token incentive protocol collaboration model is common, with some directly tied to investment + market-making. For example, in 2025, DWF Labs provided stablecoin support to Falcon Finance, offering an annual return of 12-19%, but this move led to a bad debt dispute. GSR, through the 0x API liquidity aggregation, helped projects achieve efficient transactions on the Ethereum mainnet. Jupiter Aggregator routes the best path on Solana, while newcomers like Flow Traders leverage it to lower the technological threshold. These innovations allow newcomers to stand out in the fragmented market, contrasting with the old-fashioned centralized model.

Controversy

The rise of market makers is always accompanied by controversy. The most rapid and controversial rise in this cycle is undoubtedly DWF Labs.

During the Token 2049 forum held in September 2023, its co-founder, Andrei Grachev, tweeted his thanks for the invitation after the "Web3 Connect" event. However, market maker GSR lashed out on Twitter, stating that DWF Labs had no right to sit with panelists of this forum: market makers GSR and Wintermute, as well as OKX, considering it an insult to them.

GSR expressed deep regret that by the end of 2023, bad actors like DWF Labs could still attract so much attention. Another market maker, Wintermute CEO Evgeny Gaevoy, liked the tweet. Interestingly, in the event photos shared by market maker GSR, a part featuring Andrei Grachev was conspicuously absent. Evgeny then leaked a tweet from Andrei Grachev that extensively delved into Andrei Grachev's past experiences, suggesting an association with the infamous OneCoin, the largest cryptocurrency scam in history. However, Evgeny mainly criticized the poor investment performance summarized in the tweet and referred to DWF Labs as a "wrong market maker."

Andrei, in an interview with Foresight News, expressed his indifference to such criticisms and complaints, saying, "As long as we operate within the correct and legal framework, if a method is proven to be effective, we will adopt it without worrying about what others say, and without fear of criticism or complaints from competitors."

This is just one small episode of the contradictions between market makers. Collusion between market makers and project teams has shocked investors.

By the end of April 2025, Layer 2 project Movement hired Web3Port as its official market maker and loaned 66 million MOVE tokens to them for providing liquidity. However, in practice, these tokens were found to have been transferred to an entity named Rentech, which was confirmed to be Web3Port's agent or subsidiary. This transfer may involve internal fraud or insider dealing: the contract stipulated that once the MOVE market cap reached $5 billion, Rentech could sell the tokens and receive a profit share, incentivizing price manipulation.

After the official launch of the MOVE token, Rentech quickly manipulated the price to push it up to a $5 billion market cap threshold, then dumped tokens worth $380 million the next day (about 5% of the total supply). The dump directly led to a sharp decline in the MOVE price: plummeting 86% from a high of $1.45 at listing to as low as 20-30% in a single day, causing the market cap to evaporate by billions of dollars. Once this behavior was exposed, a chain reaction ensued. Internal sources indicate that Movement co-founder Rushi Manche may have been involved in the protocol's signing, with the project team claiming to be "deceived," but contract details reveal the involvement of secretive intermediaries and advisors.

Ultimately, Movement Labs terminated Manche's co-founder position and rebranded as Move Industries. Binance also froze the market maker's related earnings and banned them from market-making on Binance.

However, the significant negative impact it caused was irreparable. The MOVE token price dropped by over 10 times from its peak, resulting in heavy losses for most investors.

According to defiLlama data, its TVL also plummeted from the peak of $166 million to $50 million, a decrease of over 300%.

This typical negative event has exposed the collusion between project teams and market makers.

It has also prompted the entire industry to reflect on the issues at hand. In terms of contracts and incentive mechanisms, market maker protocols should avoid manipulation incentives such as market cap thresholds, clearly define buyback obligations, and undergo transparent audits. Movement's case shows that secretive intermediaries can lead to fraud. In terms of transparency, project teams should disclose market maker details, token transfer records, and commitment execution (such as buybacks). Delayed airdrops and unfulfilled commitments can exacerbate a trust crisis, leading to community attrition.

Emerging projects also need to strengthen internal oversight to prevent founders from engaging in suspicious transactions. Integrity in leadership is key to the project's survival, as simply creating tokens to let retail investors exit liquidity will result in a lose-lose situation.

Summary

When the spotlight shines on the transaction arena of the crypto world, those who truly control the flow are often hidden in the data deluge. Market makers, these "dark pool operators" of the digital financial world, would rather have the code silently surging on-chain than have their names displayed in public. Among the 63 active nodes recently captured by RootData, the trading volume of just the top players is enough to stir up the market, while more players like Web3Port, Kronos Research, B2C2 are algorithmically weaving a trillion-dollar web of liquidity value.

Their office has no Arc de Triomphe, only a never-ending stream of orders; their names rarely make headlines, yet they can instantly freeze or boil the order book of certain tokens. As you trace the footsteps of a mysterious large transaction on-chain, you may be stepping on a carefully designed "liquidity trap" by a secretive market maker—and all of this is merely the surface ripple of their vast strategy matrix.

Now, 63 known coordinates have lit up, but how many unmarked eyes remain in the dark forest?"

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