A profile of London-based crypto trading firm Wintermute in the aftermath of UST and FTX's implosion and a $160M hack, as revenues dramatically decline in 2022
By deftly navigating crypto's frontier markets and winning big on the collapse of Terra's stable coin, Wintermute has grown …
Context & Ripple Effects
Wintermute entered 2022 as one of crypto's fastest risers: an early bet on providing liquidity to decentralized exchanges, backed by a $20M Series B led by Lightspeed in January 2021. By September the story had flipped — hackers drained $160M from its DeFi operations, and on-chain data showed the firm carrying $200M in outstanding DeFi debt, including a $92M Tether loan through TrueFi that came due in October.
The Forbes profile closes the year on a paradox: Wintermute won big trading the collapse of Terra's UST even as US prosecutors reportedly investigate whether FTX and Alameda orchestrated LUNA and UST's fall, and even as the FTX implosion froze the counterparty relationships its business runs on. Revenues are dramatically down — the volatility it feeds on is still there, but the leverage and trust underpinning it are not.
First-order effects
- Wintermute's capital base shrinks with its revenue decline just as it absorbs the $160M hack loss, forcing it to defend solvency rather than expand market-making across the 90-plus assets it trades.
- Lenders and counterparties exposed to the firm — TrueFi's $92M Tether loan foremost — must decide whether to roll, reprice, or exit credit lines to a desk whose books were publicly questioned.
Second-order effects
- Post-FTX, every non-bank crypto market maker faces costlier funding and stricter counterparty diligence, since Wintermute's near-miss shows how quickly a hacked, leveraged desk becomes a systemic worry.
- With leveraged desks retrenching, spreads widen and liquidity thins on long-tail DeFi assets — the frontier markets Wintermute specialized in quoting become more expensive for everyone else to trade.
Third-order effects
- If prosecutors formally tie FTX and Alameda to the UST collapse, opaque prop-trading structures lose their last credibility with institutions, widening crypto's legitimacy gap and pushing surviving market makers toward transparency and regulation as the price of staying in business.
The trend: Crypto market making is exiting its leverage-fueled volatility boom, where firms that profited from collapses like UST now confront shrinking volumes, hacked balance sheets, and counterparty distrust.