Monday, January 23, 2023

Navigating The Crypto Storm: Wintermute Accused Of Running A Sinking Ship

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Wintermute, a cryptocurrency trading firm, made headlines in September 2022 when it suffered a massive $160 million hack. However, the company continued to operate following a hack that would likely destroy some firms. Three months later, with the hack behind them, it seems Wintermute is back on track. However, not everyone believes that the company is completely out of the woods.

The Wintermute “Dumpster-Fire” 

A now-deleted Twitter thread has accused the Wintermute crypto trading firm of being a “dumpster fire.” The thread which claims to have information from current and ex-employees of the company as well as clients, claims that employees, especially the dev team, are unsatisfied with the company’s leadership and practices. 

Source | Twitter

For one, it alleges that the company was losing money to the tune of $50,000-$100,000 per tick and “the systems literally have to be shut off when a large economic event occurs because no one knows how to trade it without losing money.” Additionally, the thread states the Net Trade Income (NTI) which was reported by the company to be $1.05 billion for 2021 was actually $850 million. As well as the $225 million figure reported for the first 9 months of 2021 actually being closer to $100 million.

Related Reading: Coinbase’s 2023 Crypto Market Outlook Is Here, But Where Is Cardano?

Further claims are that employees were leaving the company at an alarming rate. Apparently, experienced staff were leaving the company as early as one month after they join. But perhaps the most impactful allegation from the Twitter thread was that employee bonuses are not being distributed fairly.

They allege that only a tiny fraction of the bonuses (3%) listed for employees in their charter (30%) were being paid while management and the CEO took home a larger share.

Wintermute 2

Source | Twitter

Is The Company In Trouble?

The sharp drop in the revenue of Wintermute has been one of the factors that sparked speculations about the health of the company. It had dropped over 78% in the first three quarters of 2022, which was enough to raise eyebrows. However, according to a recent Forbes report, the company is not too worried about this.

It says that the company which currently employs around 95 people had $720 million in assets, $400 million in equity and $50 million in VC investments. $350 million of its $400 million in equity is in USDC stablecoins and their debt-to-equity ratio is only 0.8, the company claims.

Evgeny Gaevoy, CEO of Wintermute, says they’re working harder than ever and the company is preparing for the next bull. “We don’t necessarily care about making the most now because it’ll be just a tiny fraction of the bull markets that can come,” the CEO adds.

As for the future, Gaevoy says he is considering launching a financial derivatives exchange to fill the gap left by FTX. Wintermute had lost $59 million when the Sam Bankman-Fried exchange collapsed, which saw it move its assets on centralized exchanges to Binance, Kraken, and Coinbase.

In August 2022, Tron DAO appointed Wintermute as a whitelisted institution of the TRON DAO Reserve; a role that was also given to FTX-linked Alameda Research before its collapse.

Total crypto market cap chart from TradingView.com

Total crypto market at $762 billion following FTX collapse | Source: Crypto Total Market Cap on  TradingView.com

Featured image from CryptoSlate, chart from TradingView.com

Numisteamone

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