Market Manipulation, Rug Pulling? Wintermute Founder Responds: We Are Not a Charity

By: blockbeats|2025/02/05 13:15:04

Original Author: Evgeny Gaevoy, Founder and CEO of Wintermute

Original Translation: Azuma, Odaily Planet Daily

This article is a personal essay written by Evgeny Gaevoy, Founder and CEO of Wintermute, a few days ago.

In the article, Evgeny Gaevoy responded in detail to the recent community doubts about Wintermute's price actions and retail harvesting. Unlike some other public figures who generally use a more moderate tone in their responses, Evgeny Gaevoy came out with full force, even using profanity throughout, but clearly answered the questions by deconstructing Wintermute's business logic.

Below is the full content of Evgeny Gaevoy's article, translated by Odaily Planet Daily (with some editing).

Market Manipulation, Rug Pulling? Wintermute Founder Responds: We Are Not a Charity

Recently, X (Twitter) has been particularly "lively," with some people's understanding of market mechanisms simply hitting rock bottom. Although I have explained Wintermute's business model and style of operation many times in the past, it is now necessary to go through it again.

This is Not an Apology Statement

We do not need to please those "keyboard warriors" who are constantly clamoring on social media. We do indeed trade on exchanges (whether CeFi or DeFi) with these people, but fundamentally, everyone is still trading in a public environment to get what they want. This post may help a few people understand the true work of Wintermute (and other low-profile proprietary trading firms), but to be honest, I don't hold out much hope — after all, most retail traders don't really understand that "uninformed flow" (referring to trading behaviors lacking market information or professional judgment) is our main source of profit.

This article is written for the true partners — project teams, OTC counterparties, exchanges, and the occasional passing regulator.

About My Social Media Style

Over the past few years, I have been very active on X, and my speaking style is indeed a bit abstract (even our own employees sometimes don't understand those references).

I like to use memes, and I'm also okay with being meme'd, such as the recent memes about various candlestick charts crashing. If you take it seriously, that's your problem. A sense of humor is a basic human quality, and if you are lacking in that area, then I'm sorry.

If you think it's not very nice to joke about those "unfortunate souls who got liquidated on xxx"... I can only say welcome to the craziest casino in history, adults please take responsibility for your choices.

We Are Not a Charity

Wintermute, like all other proprietary trading firms, aims to make money through trading, we are not a charity. More specifically, our core business is digital asset trading. Therefore, we are not only interested in profiting as much as possible from various market opportunities, but also very interested in the continuity, development, and growth of this field. Since 2020, our venture capital department has been investing in cryptocurrency and has never been net short. Our cryptocurrency exposure has always accounted for 20% to 30% of net assets.

Claiming that we short the market is nonsense. Whether it's the Luna crash, 3AC rug pull, FTX bankruptcy... we lost more than we gained in these black swan events, not to mention the long market winter that followed.

What Does Wintermute Actually Do?

Our core business is in DeFi, CeFi, and OTC—compared to most competitors, our business is more diverse. We will switch battlefields at any time based on market trends, from BTC, ETH L2, Meme coins, to AI—we embrace them all.

· CeFi Market Making: We provide liquidity on over 50 exchanges such as Binance, Coinbase, with order books for hundreds of assets, profiting from bid-ask spreads. During a bull market, we feast on active trading volumes, and during a bear market, we compete with other market makers in a "harvesting" battle. We also run so-called "market making" strategies, allowing us to arbitrage between different platforms and outsmart the slower market makers.

· DeFi Arbitrage: We provide liquidity on 1inch, Jupiter, Bebop, arbitrage on Uniswap, conduct liquidations on Aave, Morpho, and market make on Hyperliquid. We are definitely experts in this field.

· OTC Trading: Our coverage is extensive, both in terms of token quantity and transaction types (spot/futures/options). We aim to expand our business through better technology rather than a larger sales team.

All the above operations will maintain delta neutrality. This means that if we sell an asset on Binance, we will simultaneously seek the best price to buy back from all available liquidity sources. OTC trades may take longer to balance, especially when trading long-tail assets, but our ultimate goal is also to achieve delta neutrality.

Occasionally, we also proactively bet on the market direction, but the position is very small and not long-term. The vast majority of our proactive operations are long positions, such as buying the dip or purchasing locked tokens at a substantial discount, although we also short, but this is very rare — because some garbage coins may suddenly surge by 500%, and the short risk is too high.

Why Does a Token Decline?

Now let's discuss more specifically why prices drop, especially why a token's price drops even after Wintermute makes a market or it is listed on Binance.

Macro Environment Impact

The recent two crashes were both due to traditional financial markets (DeepSeek breaking AI value logic, tariff impact). Now the crypto market is highly correlated with the US stock market (Nasdaq drops → BTC drops → SOL drops → meme collapse), to become a more successful trader, you should understand that our tiny cryptocurrency market now has a very direct connection to the outside real world. Of course, you can also ignore this information, choose to believe in Wintermute and Binance's conspiracy. Good luck to you, and keep being poor.

Supply-Demand Imbalance

The higher the token liquidity, the easier it is to sell. When a token is listed on Binance or when Wintermute starts market making, the token's liquidity will be enhanced, and early holders will find it easier to sell. If the project itself lacks sustained appeal, the price will naturally decline. If you still haven't figured this out by now and instead like to blame your trading skills on the exchange and market maker, then once again, I wish you good luck.

Market Making Protocol Terms

Some token projects embed a call option in the market maker agreement, allowing the market maker to sell when the token price is above the strike price (which is usually much higher than the price at which the market maker participated). This indeed affects market fairness. I believe the industry needs more transparency, but the disclosure rights are in the hands of the project team.

Rapid Fire Q&A

Here are some final answers to common community questions.

Regarding "Stop-Hunt" Liquidation

We do not engage in "stop-hunt" liquidation. Perhaps we should, but I've always felt it's a risky business, so I prefer to steer clear.

Regarding Price Manipulation

Oh, we don't manipulate the price. First, we don't know how to manipulate it; second, our core business is profitable enough, so we don't engage in illegal foolishness; third, I live in London and enjoy traveling to the US, so I have no desire to move to Dubai.

Regarding On-Chain Transfers

It's just rebalancing across different platforms. Sometimes you'll see Christmas tree-like candlesticks on AMMs, which are traces of our arbitrage between CeFi and DeFi.