Crypto market maker Wintermute raises $20 million from Lightspeed, Pantera Capital

Cryptocurrency market maker Wintermute has raised $20 million in a Series B funding round.

The round was led by Lightspeed and included participation from Pantera Capital, Fidelity's Avon Ventures, and Sino Global Capital, among others. Existing investor Ventures also participated in the round. The firm plans to use the funds to expand into new businesses and geographies.

In a note to The Block, Wintermute said that it is "highly profitable" but needed the fresh injection of capital to beef up its balance sheet to woo larger counter-parties to its over-the-counter (OTC) trading platform. The firm said that the round was "substantially oversubscribed," noting that some employees also participated. 

Wintermute makes markets across 50 cryptocurrency exchanges and traded $50 billions worth of crypto last year. The firm said it is on track to double the amount it traded last month in January. 

Wintermute is currently piloting its own OTC request-for-quote platform with several beta counter-parties and plans to launch the service within the first quarter of the year, CEO Evgeny Gaevoy told The Block. He added that the entrance of new institutional capital has made this a more attractive opportunity for the firm. In recent months, well-known investors ranging from Anthony Scaramaccui to Stanley Druckenmiller have publicized their recent bets on cryptocurrency. 

"Since we have some of the most competitive pricing in the market, we were literally pulled into this business by our counterparties and partners that we work with," said Gaevoy. "The algorithms we use for OTC are the same we use for our proprietary trading, so we have an advantage when it comes to pricing."

The firm continues to see an opportunity in the burgeoning market for decentralized finance (DeFi), which has been a "major growth point." Wintermute also plans to expand its operations to Asia where it will launch a physical presence in Singapore this quarter. 

This post has been updated to clarify the amount of volumes Wintermute traded in 2020.