Market Maker DWF Labs emerges as top crypto investor
Investments in crypto companies, which poured in at a record pace during the 2021 bull market, slowed to a near halt as the bear market began and headline scandals rocked the industry.
However, market maker DWF Labs, which has been operating in the crypto space since 2016, has stepped in with a steady wave of investment, along with a few splashy venture capital firms.
“We believe that this bearish market – this turbulent market – is the best time to join the investment space,” DWF Labs managing partner Andrei Grachev told CoinDesk in an interview. “We raised enough funds from our profits to invest in projects now.”
DWF Labs has offices in Singapore, Switzerland, British Virgin Islands, United Arab Emirates, South Korea and Hong Kong. The firm is affiliated with Digital Wave Finance (DWF), a global crypto trading player trading in spot and derivatives markets on over 40 top exchanges.
As an investor, DWF Labs prefers to participate through token purchases and favors infrastructure projects, including tier one and tier two development. The firm is also interested in AI-based projects and gamified finance (GameFi). DWF has recently backed a $40 million round for “alternative internet” provider Tomi, a $20 million fundraising for derivatives trading platform Synthetix and a new $40 million raise for AI-focused crypto protocol Fetch.ai, to name a few.
Infrastructure projects and consumer-facing solutions that make crypto more accessible for mass adoption are key areas of the bear market, Grachev said.
Market makers are trading firms that use their own money to bet on tokens and take the opposite position on trades on exchanges, enabling investors to enter or exit the market quickly. The collapse of centralized exchange FTX – thanks to liquidity problems first revealed in a CoinDesk report – likely removed smaller market players who were too exposed. Exposure to centralized exchanges is part of market making, as decentralized finance (DeFi) tends to offer less flexibility, Grachev said.
US regulators are a constant threat to the crypto industry and centralized exchanges. In the latest salvo, the US Commodity Futures Trading Commission (CFTC) sued dominant crypto exchange Binance and its founder Changpeng Zhao, alleging the company knowingly offered unregistered crypto derivatives products, violating federal law.
“It seems that the crypto market is going to be divided into the US market and then outside the US,” Grachev said. “We are mostly concentrated on Asian markets and not on American exchanges. We trade on American exchanges, but no market making. It is a huge risk. I am quite sure that most of the market makers will follow this path.”
