, which was one of Wintermute’s close competitors, shocked Gaevoy and Gurevich as much as it did everyone else. “We knew they were a bit reckless and made big bets, but we could not have imagined the level of, frankly, stupidity that seems to have gone into their trading and management decisions,” Gurevich says.
The two met in college, at the Higher School of Economics in Moscow, a highly selective, math-heavy institution founded in 1992. “It was very, very American … very, very capitalist … And it shaped us in a very big way,” Gurevich says. They met after they placed in the top 10% of their class based on their English-language skills and were assigned to the same working group.
But in January 2020, Gaevoy says he had a breakthrough. The arbitrage trading algorithms he had built, which searched for price differences for a single cryptocurrency on different exchanges so he could buy on one and quickly sell on another, started producing real profits. On March 12, while the pandemic was causing U.S. stock markets to, crypto trading volume spiked, and Wintermute made $120,000 in 24 hours.
It began trading newly invented tokens including one fledgling coin called sushi, which had such low liquidity that Wintermute could charge spreads—the difference between the prices it was willing to buy and sell at, and part of which it could then claim as profits–of 2%. As crypto trading volume in 2021 started hitting records, the scale of Wintermute’s operation created compounding benefits. It was connected to 30 centralized exchanges, including everything from Coinbase to Dubai-based Bybit, plus dozens of decentralized exchanges, and it was trading 350 different tokens. Like having a satellite’s view of the crypto market, that breadth was hugely helpful for arbitrage, opening a large universe of varying prices for a given asset.
This year has been a bit different. As inflation and interest rates have risen, nearly every asset class has slumped, with crypto being one of the hardest hit. Wintermute booked just $225 million in revenue in the first nine months of the year, down sharply from 2021. Some of its risk-taking in DeFi has also come at a big cost: Wintermute suffered a