Synthetix Co-Founder Exposes Market Maker Manipulation Tactics

Kain Warwick, the co-founder of Synthetix, recently revealed on social media the manipulative tactics employed by market makers to profit from the cryptocurrency market. According to Warwick, during the Initial Coin Offering (ICO) era, projects struggled to raise funds without reaching agreements with multiple market makers, with monthly costs ranging from $50,000 to $300,000. These market-making agreements have since evolved into an options structure, where market makers manipulate the market through a low float strategy.

This strategy involves shorting at the Token Generation Event (TGE) peak, buying at the bottom, pumping the price again, and then dumping after exercising their options. The low float strategy, popularized by Sam Bankman-Fried (SBF), has further fueled this arbitrage tactic. Recently, a new method has emerged where projects sell tokens to liquidity funds at a discount before TGE and guide market makers to dump directly after the low float pump.

Warwick highlighted that DWF Labs once used a similar method to operate Synthetix, buying coins from the treasury to pump the price and then cashing out by dumping. Projects have various ways to extract value from token buyers, and Warwick warned that if a large amount of tokens are transferred to market makers, it is likely that they see token buyers as just exit liquidity.

This revelation sheds light on the manipulative practices within the cryptocurrency market, where market makers exploit low float strategies and options structures to profit at the expense of token buyers. The tactics described by Warwick underscore the need for greater transparency and regulation in the cryptocurrency market to protect investors from such manipulative practices. The evolving nature of these tactics highlights the ongoing challenge of maintaining market integrity in the rapidly changing landscape of digital assets.