At the start of 2023, a newcomer burst onto the crypto scene. DWF Labs seemed to appear everywhere, throwing lifelines to struggling projects in the wake of FTX's collapse and the broad market downturn. The firm invested $20 million in Synthetix, $28 million in Conflux, $40 million in Fetch.AI, $45 million in the EOS Network Foundation, and $50 million in the Algorand Foundation. According to Foresight News, DWF claims to have invested in 470 projects within just 16 months of its founding and to have partnered with roughly 35% of the top 1,000 tokens by market cap. But a fledgling company spending so lavishly raised questions about the nature of these investments.
In April, a joint report by The Block and CoinDesk revealed that most of these deals were structured as over-the-counter (OTC) trades rather than traditional fundraising rounds. However, many questions remain about how DWF operates. To investigate, this article interviewed 16 DWF clients, potential clients, and individuals familiar with its operations, and analyzed 10 proposals, contracts, and communication records. Key findings: DWF frequently discussed potential token price movements when pitching both prospective and existing clients. DWF Labs declined to comment or be interviewed.
Price Management: Written Promises to Pump Tokens
DWF Labs was founded in September 2022 and soon created a sales brochure. The Block obtained and verified the document, which heavily references price-influencing behavior. In a section titled 'Price Management,' the trading firm says it can work in sync with a client's marketing team to help the token price react to events. The brochure explains how: 'Before or during planned significant news events, the algorithm can be adjusted to lean on one side of the order book to push the price up.' It adds: 'Since this is done at the passive order book level, rather than by actively creating artificial volume, the price increase looks more organic. Please note that DWF can provide artificial volume, but due to the competitiveness of the price, it is generally not necessary.'
Similar language appeared in later proposals. For a time, DWF's proposal template explained how it would use its market-making services and proprietary capital to trade the client's tokens and improve the token market, promising 'bullish sentiment, organic trading activity, and price improvement.' One potential client said that over the past few months, a DWF employee would show charts of past collaborations where token prices had risen. If a client hesitated during a call, a DWF executive would start explaining past price increases. Another prospective client provided messages from earlier this year where DWF management explicitly said they would boost the token price. A third client shared messages where DWF's managing partner Andrei Grachev asked how high they wanted the price to go and discussed whether the firm could achieve it. However, in recent months DWF appears to have stopped such price-management language in its written materials, at least in the brochures.
Three Trading Models: Discounted OTC, Locked Tokens, and Market Making
DWF focuses on three types of deals: liquid token investments, locked token investments, and market-making services, often bundled together. For liquid token investments, DWF typically buys tokens at a 5-15% discount to the market price using stablecoins, with purchases spread over a month or more, daily amounts around $100,000-$150,000, priced at the day's opening minus the discount. This allows project founders to cash out at a slight premium and market a 'large investment.' One source said: 'This OTC deal becomes a godsend for many small projects—they can offload tokens while attaching a well-known institution's name and extend their runway.' A DWF client admitted this was precisely why they worked with the firm: to shed token holdings without selling directly on the market.
Grachev has disputed this narrative, saying that transferring tokens to exchanges does not mean immediate selling. In a April interview, he stated: 'We transfer tokens to exchanges but never dump them. For example, most of our trades from last month or earlier remain unsold or only a small portion sold.' However, a point of contention is that DWF often announces token purchases before completion, but may not complete the full purchase. To address this, Grachev said: 'Since the first half of this year, we've learned many lessons. We no longer announce any unfinished work. If we announce something, it's done.'
Regarding market-making, based on two proposals seen by The Block and one client's contract, DWF's services typically last over a year. Both proposals include obtaining project tokens as a loan, along with a call option to buy tokens at the signed price. The option becomes exercisable once the token price reaches a certain level (strike price). This is common for market-makers to protect against losses if the token price rises and they have to repay a larger loan. Jordi Alexander, CIO of Selini Capital, explained: 'Market-makers must show both bids and asks. For downside protection, they choose projects they are willing to hold. For upside protection, they need a strike price.' Typically, the strike price is about 100% above the starting price, according to two sources familiar with other market-making firms. But DWF's proposals set the strike at many multiples of the token price, meaning if the price surges, DWF makes an enormous return. A source familiar with DWF's operations said: 'If you're a market-maker, you want the price to go up. You make money from options pricing over a year. You want to exercise the option below the target price; that's where profit comes from.'
DWF's market-making proposals also explicitly mention helping to publicize project announcements and boost community engagement. Internally, a source said DWF notifies employees when announcements are made and encourages them to post content to 'strike while the iron is hot.' However, transparency with clients is often lacking. One DWF client noted that unlike other market-makers, DWF provided few details about its market-making activities. 'Usually there's a detailed report. But they didn't provide one. Frankly, we don't know exactly what they did with the tokens,' the client said. Another client confirmed they didn't receive any reports; they had to contact the exchange to verify services were being provided. For locked token venture investments, DWF typically seeks discounts of up to 50% with lockups of 1-2 years, paying with stablecoins.
Partner Feedback: Some Satisfied, Others Silent
Despite the controversy, DWF continues to grow. It runs a validator node on the TON blockchain. Several partners expressed satisfaction in written responses to The Block. Eric Wragge, Global Head of Business Development and Capital Markets at Algorand Foundation, confirmed the $50 million investment was an OTC trade where DWF purchased ALGO in installments, completed in July 2023. 'No one hinted at market manipulation or artificial volume during negotiations,' he said. Yves La Rose, CEO of EOS Network Foundation, said the strategic partnership with DWF was 'fruitful,' significantly expanding the ecosystem through cross-collaboration and financial investment. A core team member of meme coin Floki, identified only as B, said: 'We are very satisfied with the partnership.' Floki sold $5 million in tokens to DWF. 'On an institutional level, they helped a lot—opened their network, facilitated exchange listings and collaborations with portfolio partners, and promoted our brand. They have a very strong and professional team that responds within minutes at almost any time, often with personal involvement from Andrei.' Synthetix declined to comment; Conflux and Fetch.AI did not respond to requests. None of the crypto projects mentioned indicated that DWF had engaged in price-management conversations.
Moving Forward Amid Controversy: Audits, Licenses, and Showmanship
In September, HTX (formerly Huobi) awarded DWF the Best Partner award. Grachev posted on X that the firm is undergoing an audit by a Big Four accounting firm (unnamed) and is applying for multiple licenses, including a virtual asset service provider license in the British Virgin Islands. Looking ahead, DWF is launching its first incubation program for crypto companies and plans to create a compliant OTC crypto trading market. Grachev himself does not shy away from flaunting wealth and success. Last month, an anonymous crypto trader on X asked for a car; within three hours, Grachev sent $22,000. Observers noted the similarity to former FTX CEO Sam Bankman-Fried's occasional Tesla giveaways last year. Grachev also posted a photo of a Lamborghini with the DWF Labs logo, while other posts showed events in Istanbul and Hong Kong. Reflecting on the past 16 months, Grachev admitted to mistakes and said the company is 'not ideal,' but claimed DWF has raised the standards of market-making firms by taking risks and doing things differently. 'We are controversial and proud of it,' he said.