In a $1.15bn about-face, Citadel aims at cryptocurrencies
14:25, 12 January 2022
Citadel Securities, founded by noted cryptophobe Ken Griffin, has taken $1.15bn (£845m) in funding from private equity firms Sequoia and Paradigm and plans to expand operations into cryptocurrencies, the firm announced.
The $1.15bn cash infusion, led by Sequoia, values the market making arm of hedge fund Citadel at $22bn. Citadel will use the funds to expand its reach into new products, markets and regions, the company said in a media release.
“In Sequoia and Paradigm, we have partners that appreciate how the strength of our market expertise, advanced predictive analytics and superlative software engineering can redefine an industry,” said Citadel chair Ken Griffin. As part of the investment, Sequoia partner Alfred Lin will join Citadel’s board of directors.
“We look forward to partnering with the Citadel Securities team as they extend their technology and expertise to even more markets and asset classes, including crypto,” said Paradign co-founder and managing partner Matt Huang.
A ‘jihadist call’
Griffin notably called investing in cryptocurrency “a jihadist call” last October in remarks at the Economic Club of Chicago. Griffin added that regardless of his personal feelings regarding any particular investment, Citadel would still carry out the trades his clients wished.
At the time, Griffin was steadfast that cryptocurrency was off limits for Citadel without more regulatory clarity from the US Securities & Exchange Commission (SEC). “I just don't want to take on the regulatory risk in this regulatory void that some of my contemporaries are ready to take on,” Griffen added in his remarks, noting Citadel would not trade cryptocurrencies without stricter regulation.
“As technological innovation in financial markets becomes only more important, we see enormous opportunities to meet the needs of our clients across more markets and more products, said Citadel Securities CEO Peng Zhao in the same release. “Our partnership with Sequoia and Paradigm puts us in an even stronger position as we continue to scale our business, broaden into new markets and attract the world’s most brilliant minds.”
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Citadel is Robinhood’s clearinghouse
Chicago-based Citadel is also Robinhood Markets’s clearinghouse, and came under fire last year for allegations it influenced Robinhood’s decision to halt trading in certain stocks during the so-called “meme stock” frenzy, as well as regulatory scrutiny over its use of “payment for order flow” pricing model allowing retail brokerages like Robinhood to offer no-commission trading.
SEC chair Gary Gensler asserted the practice creates an “an inherent conflict of interest”, noting the market maker clearing each trade gets the first look at each trade, allowing them to match buyers and sellers.
Read more: Robinhood shares battered by SEC chair’s comments
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