Interview with DWF Labs: We Don't Manipulate Anything
TechFlow Selected TechFlow Selected
Interview with DWF Labs: We Don't Manipulate Anything
Regarding the recent community controversy, BlockBeats recently conducted an exclusive interview with DWF Labs, a well-known crypto market maker, to uncover the truth behind liquidity issues.
Navigating Web3 tides with focused insightsInterviewer: Jack, BlockBeats
Editor: Sharon, BlockBeats
Editor: Jaleel, BlockBeats
This year, DWF Labs has become a household name in the crypto space.
Since March, DWF Labs has been acquiring projects on the secondary market at an average pace of five per month, making large investments that have sparked heated discussions within the community. Andrei Grachev, Managing Partner at DWF Labs, said in an interview that most of the time, DWF Labs invests by directly purchasing tokens.
However, some in the community believe DWF is not making genuine investments—rather, they're just acquiring tokens for market-making purposes. In recent months, YGG, DODO, and C98 have exhibited nearly identical volatile price swings. While there's no direct evidence linking DWF to these pump-and-dump activities, wallet addresses flagged by multiple on-chain analytics firms as belonging to DWF have shown significant on-chain activity, reinforcing suspicions among institutions and investors that DWF Labs has repeatedly engaged in market-making behavior. Due to differences in investor sophistication, some have profited regardless of price direction, while others have suffered heavy losses amid such short-term volatility.
Similarly, the CYBER fiasco at the end of August once again brought DWF Labs into the spotlight. Their behind-the-scenes arbitrage maneuvers triggered massive market fluctuations, drawing widespread backlash from the community.
Some argue that DWF Labs' manipulation of the crypto market is too blatant, which could severely damage the industry’s reputation and invite stricter regulatory scrutiny. Recently, BlockBeats conducted an exclusive interview with Andrei Grachev, co-founder of DWF Labs, to uncover more insights behind the controversies.
Andrei Grachev, co-founder of DWF Labs, graduated from Orenburg State University (OSU). Prior to entering blockchain and cryptocurrency in 2017, he worked in logistics and online trading. He previously served as Managing Partner at Crypsis Blockchain Holding, Trading Vice President at the Russian Association of Cryptocurrency and Blockchain (RACIB), and CEO of Huobi Russia. In 2018, he co-founded DWF Labs.
The Current Market Needs More Than Just Liquidity
Before 2023, DWF Labs had not gained mainstream attention in the crypto world. But this year, their frequent interventions in market-making across multiple projects have drawn significant attention. According to data from its official website, since 2018, DWF Labs has conducted spot and derivatives trading on over 60 top-tier exchanges, trading more than 800 currency pairs and covering virtually all verticals in Web3, maintaining a leading position in the market-making sector.
When selecting tokens for market-making, DWF Labs primarily focuses on East Asian projects and trending narratives, both new and old. Projects they've provided liquidity for include CFX, MASK, ACH, FET, and YGG. Among them, YGG and CYBER (at the end of August) are two projects that have generated particularly high levels of discussion within the crypto community.
For both projects, the accusation of "pump then dump" represents the biggest criticism against DWF Labs—and lies at the heart of their controversial reputation. Numerous other projects in which DWF Labs has participated in market-making have also experienced sharp price swings within short periods. However, many users incurred severe losses specifically during the YGG and CYBER episodes. Wintermute even publicly accused DWF Labs of malicious intent, and some in the community question whether DWF Labs is guilty of “being both referee and player.”
Related Reading: "Who Is DWF Labs, the Firm Making Waves with Frequent Investments? 'VC + Market Maker,' Investing in 5 Projects Monthly"
BlockBeats: What progress has DWF Labs made so far?
Andrei: We’ve made important progress in building our network—meeting with partners, clients, exchanges, and project teams. This is crucial for our business. Today alone, I’ve held six meetings regarding our incubator program with several startups and major projects involved in certain matters.
BlockBeats: I understand DWF has a very unique approach to project operations and is highly active on social media, sparking much debate. In your opinion, how should crypto VCs or ecosystem partners engage in market operations and provide liquidity?
Andrei: Overall, competition is intense, and it will only get fiercer in the future because projects increasingly require specialized support. By “specialized,” I mean that about one or two years ago, simply providing liquidity—even weak liquidity—was sufficient. We entered this field about a year ago and received a report from another market maker. One project sat down with us; the founder is a long-time friend of ours.
Before 2022, we never provided liquidity to projects—we only did so for exchanges. We trade every coin with decent volume and volatility, every futures contract, every option. When we partner with a project, we don’t need to build systems from scratch or tailor adjustments for specific cases. In 99% of cases, unless it’s an IOA (Initial Offering Agreement), for already-listed projects, we only need to slightly adjust our strategy to align with the project’s goals.
As for ecosystem support, this includes trading volume, protocol integration, introducing projects to protocols, collaborating with our portfolio companies—which now form a large and valuable network—and offering market, technical, and HR support. I believe that any company aiming to win in the liquidity-providing space must be able to generate complementary value streams. For example, if you’re working with us and need a developer, a CTO, or a marketing director, you don’t need to look elsewhere—you can come directly to us, because as partners, we offer those complementary services.
That’s our philosophy. Risk management is key. On one hand, you must manage risk well; on the other, you must create opportunities to capitalize on in the future. I may not look like a financier, and no one on our team does either—we care about our work, not appearances. What matters is our performance in the market.
BlockBeats: But people might say market makers or ecosystem partners aim for longevity, whereas VCs are inherently short-term players. How do you see this?
Andrei: If we were in 2021, yes, VC was somewhat short-term. You’d invest today, tokens would list in one or two months, and you could exit—even unlocking just 5% could cover your cost or turn a profit due to 20x or 50x rallies. But times are completely different now. Today, venture capital is a long-term strategy with high risk, because while you can predict near-term market conditions, forecasting two years ahead is impossible. We’re still in a bear market cycle, which appears to be turning bullish soon—but only appears so. A real bull run isn’t coming quickly.
That’s our VC philosophy: quality over quantity first—build influence before scaling numbers, because VC is always about statistics. If you have only one project, even with a 75% success rate, there’s still a 25% chance of failure. But if you have 100 projects, even if 75 fail, the remaining 25 can make you billions. It’s a statistical game. But the quality of your decisions depends on your goals and skills. Right now, we’re actively improving our capabilities in both areas.
"DWF Doesn't Manipulate Anything"
Currently, criticism of DWF Labs centers on its dual role in market-making and investing. The label “VC + Market Maker” is the primary source of controversy—and one DWF Labs openly embraces, clearly stating it on their official website. Their site previously stated, “Regardless of market conditions, DWF Labs invests in an average of five projects per month.”
Public records show DWF Labs’ investment portfolio includes Fetch.ai, Synthetix, Flare Network, Coin98, Yield Guild Games (YGG), TON, Conflux, Mask Network, among others. Spanning blockchain infrastructure, DeFi, NFTs, GameFi, DAOs, decentralized social, data analytics, privacy, and entertainment, it’s difficult to pinpoint a clear focus in DWF Labs’ investment strategy. Yet many of their invested projects have exhibited the “pump-then-dump” pattern.
For instance, on April 25 this year, DWF Labs announced an investment in ARPA Network. Subsequently, ARPA’s token price rose over 2x within a month, then dropped nearly 40% on the day of its peak. On June 22, Adventure Gold DAO announced funding from DWF Labs, which committed to purchasing seven-figure worth of AGLD tokens. Over the next month, AGLD surged almost 2x, then fell over 40% the day after reaching its high.
These incidents have sparked intense debate. Some claim DWF isn’t making real investments but merely acquiring tokens for market-making. Others accuse DWF Labs of profiting through market manipulation. Amid such controversies, DWF Labs has frequently landed on crypto’s “trending topics” list.
BlockBeats: As a market maker or ecosystem partner, does your investment approach and style differ? Do you combine financial support with other forms of assistance?
Andrei: We always do more than just give money. We have a dedicated entity handling our investments. These are tough times for projects—even big ones suffer due to lack of funds. Markets are fragile and prone to collapse. In crypto, it makes sense to provide liquidity while also investing.
Given the risk of market collapse, we try to invest in certain projects. But projects also need to explain the rationale to their communities and investors: Why choose us instead of going straight to an exchange? That’s also a valid question, as circumstances differ. If we add value through our involvement, it’s acceptable—and people usually respond positively. But if a project goes directly to an exchange and dumps tokens, it often looks like a party.
People know it’s purely profit-driven, showing no concern for the market. But in that case, without investors, OTC buyers, market makers, or supporters stepping in, why should ordinary investors hold these tokens? It seems odd—and dangerous for the project. So we’re trying to help.
BlockBeats: Particularly in China’s crypto community, people often discuss price anomalies following investments—or partnerships involving your firm. For example, when DWF invests in a project, its price sometimes surges dramatically and then quickly drops. What’s your take on this?
Andrei: We don’t engage in any manipulation. When people see signs that an asset might be profitable, they rush in. Liquidity isn’t as strong as it was a year ago—it’s easily moved by market participants themselves. Of course, we have futures markets, which serve as tools for hedging positions and trading clubs. We’re fundamentally different from directional traders.
Take directional traders: suppose you have $100 and enter the futures market with 25x leverage—your position becomes 25 times larger. If the coin price increases tenfold, you start thinking you can turn $100 into $20,000. People often underestimate risk and overestimate opportunity, then get burned.
Of course, someone else might take the opposite position and end up happy. Screenshots circulate showing profits, making people feel great. That’s how markets work. I think people always need someone to praise or blame. In this market cycle, it happens to be us. Next cycle, it’ll probably be someone else.
BlockBeats: That’s a fascinating perspective. Do you see this as an unintended benefit—something that helps reinforce your market-making strategy and encourages others to follow your moves?
Andrei: Our market-making strategy is entirely independent from DWF Labs because we don’t manually intervene. We have our own system built in 2018 for proprietary trading. It trades autonomously, providing liquidity for certain coins and markets. It operates independently. When sentiment shifts, it self-adjusts—we never plan for such outcomes.
First, we don’t need it—we’ve been quite successful in trading. Since 2018, we’ve never had a losing year. We don’t rely on such tactics. Second, if you go back to a few months ago when the market was calmer, the situation might have looked completely different. We remain market-neutral—we avoid directional risk, which is extremely difficult.
BlockBeats: One last thing—whenever you announce an investment, most announcements state exactly $10 million. Is there a specific reason behind this?
Andrei: Yes, it’s part of our investment strategy. We learned a lot in the first half of this year. Previously, when we had long-term agreements, people didn’t like it. Now, we won’t announce anything that hasn’t been completed. If we make an announcement, it’s already done. And if anyone wants to verify, they can ask us or the project for transaction IDs and check on-chain. We won’t announce anything unfinished—even if contracts are signed—because we’ve learned from past mistakes. We won’t repeat them.
BlockBeats: Many are curious about how you raise funds. What’s your strategy, and where does your capital come from?
Andrei: We’ve never raised external funds or had outside investors—we truly started from zero. Back in 2018, I was CEO of Huobi Russia, though I hadn’t yet joined DWF Labs. We met because they were looking for a suitable exchange account with good rates, starting from scratch.
At the time, I was CEO of a local exchange and urgently needed traders—that was my KPI. We met, and I convinced Huobi to give DWF Labs the best possible rates, since high-frequency trading requires low latency and optimal fees. It took me two months to persuade Huobi’s management, and in April 2018, they agreed. I still remember when DWF Labs deposited $50,000 into Huobi—the first day’s trading volume hit $10 million, and the second day reached $22 million.
How could $50,000 in operating capital generate such massive volume? Well, it was crazy—and so was the market at the time. In spring 2019, Binance launched its launchpad, reigniting bullish sentiment. Fortunately, in summer 2019, I introduced them to Okex and Huobi, taking responsibility for managing partner relationships.
I simply helped them—thanks to my connections with Chinese exchanges—set up accounts with favorable rates. They grew rapidly because we earned around 15 to 20 basis points in profit from credit-based trading volume. Imagine trading $1 million and earning $20,000 in profit—every single day.
Of course, competition intensified and margins shrank. But even now, we earn a few basis points from volume. In 2021, many exchanges and projects emerged, generating enormous trading volumes. Historically, we’ve been especially strong in short-selling markets, where trading volume is consistently huge. This year, we made a lot of money. Now, we have our own data center in Switzerland and a trading company in the Cayman Islands. We’ve never raised funds. This gives us an edge—not printing money, but working hard to generate substantial returns through multiple streams like high-frequency trading, market-making, and venture capital.
Crypto or Traditional Finance?
As a crypto VC, DWF Labs focuses on blockchain-related projects. Yet it also harbors ambitions to expand into broader traditional financial markets—a trait shared by fellow crypto-native fund Paradigm. In May, users noticed Paradigm changed its homepage tagline from “Paradigm supports transformative crypto/Web3 companies and protocols with investments ranging from $1 million to over $100 million” to “Paradigm is a research-driven technology investment firm.”
Although Paradigm later reinstated references to “crypto” on its homepage—co-founder Matt Huang calling the removal a mistake—the move still sparked discussion. Some speculated Paradigm would shift focus toward generative AI led by OpenAI. Similarly, DWF Labs hopes to diversify beyond crypto before the next major bull run arrives.
BlockBeats: What are your thoughts on future markets? With declining profitability, have you considered exploring other markets?
Andrei: We have plans and are already expanding into traditional markets. For us, we trade symbols—we don’t care whether it’s Bitcoin, Ethereum, or something else. We deal with symbols, prices, volumes, liquidity, and data. Right now, we’re exploring the foreign exchange market purely for currency trading.
Of course, in crypto, we can only optimize strategies and wait for the next large-scale bull market. Additionally, we’ve been in the options market since 2020. We believe the crypto options market will grow significantly in the future. We operate our own options firm trading crypto derivatives. In traditional finance, options make up 30–40% of derivatives; in crypto, it’s only 3%. If it reaches 30%, that’s a tenfold increase. Those with an edge here will earn massively—and we want to be among them.
BlockBeats: So what’s your outlook on crypto profitability?
Andrei: It’s always cyclical. In this cycle, you can profit from market-making, venture capital, and incubation—especially by delivering greater value to projects in exchange for larger stakes. High-frequency trading can also yield profits, though it’s limited by finite trading volume. But I believe the next cycle will outperform the last.
I see many TradFi firms entering the space now—they’re building probe systems for high-frequency trading. These are big players. I think traditional financial institutions are eyeing this opportunity. I wouldn’t say they’re bullish, but they see it as a future opportunity. They prefer to get involved early and wait, rather than trying to jump in when the market turns bullish.
BlockBeats: So for the next market cycle, we’re essentially waiting for Old Money to arrive.
Andrei: Not all of it, because historically, bullish cycles have been driven by Asia and emerging markets—not Europe, where trading activity is lower. For example, something happens in the U.S.—like ETF approval or Bitcoin futures clearance—then it ripples globally, pulling everyone in and creating a bull market. That’s what we’re waiting for.
BlockBeats: One final question—on regulation, do you have any preemptive plans?
Andrei: We have no external investors, so excessive regulation isn’t required. We already hold licenses. We’re currently seeking an auditing firm in Dubai because some projects and clients request our full balance sheets. But you know, for pure high-frequency trading, we don’t want that—because HF firms have extremely high operational costs.
For example, right now as we speak, we execute hundreds of trades per second. If auditors had to verify every single transaction, it would require massive documentation. Auditing our HFT operations could cost us $10–20 million annually—but we don’t need to do that. We’ve already applied for a VASP license in the British Virgin Islands and expect to receive it soon.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
BlockBeats
