Citadel Crypto Exchange On The Horizon, Despite Ken Griffin’s Skepticism

If you can’t beat them, join them. It’s the saying Citadel Securities follows with his new project. The market-making giant is getting into the crypto game, even as its founder expresses his own skepticism of the market. Backed by some of the biggest venture capitalists in the crypto industry, will a Citadel crypto product become a leader among exchanges?

Citadel Securities was founded by investment expert Ken Griffin. He created it 20 years ago to provide liquidity and execute trades for institutional and retail clients. It is the sister company of Citadel LLCa hedge fund also founded by Griffin.

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Citadel is one of the largest market makers in the world, operating in over 50 countries. And in recent months, investors have been speculating about the possibility of an initial public offering (IPO) from Citadel. The rumors come as the company benefits from a $1.15 billion investment from venture capitalists Capital Sequoia and Paradigm. Although Citadel does not comment on the likelihood of an IPO, the investment is believed to be one of the first steps.

The company has also generated strong interest through its partnership with Robin Hood (NASDAQ:HOOD). Citadel Securities is the primary market maker for the company’s online trading platform. Both came under scrutiny from retail investors in early 2021 as the Securities and Exchange Commission (SEC) investigated Robinhood’s order flow payment model.

The SEC questioned whether the model allowed market makers to exploit retail trades for extra money in exchange for bribes. However, much of that talk fades away after a judge dismissed a class action lawsuit brought by retail traders linked to the practice.

Citadel Crypto Exchange on the way, despite Griffin’s crypto reservations

The company is building on the publicity it has received over the past 18 months with another hit news. According CoinDesk, a Citadel crypto exchange is on the way. The news comes just weeks after Griffin called for tougher crypto laws.

According to the report, the company is partnering with another market maker Virtual Financial on its own cryptocurrency trading floor. While it sounds a lot like a VC-backed centralized exchange, Citadel hates to call the product that. Instead, a source familiar with the news says that Citadel describes the incoming product as “more of a crypto-trading ecosystem or marketplace than an exchange.”

In anticipation of the trading product rollout, the company has hired executives to lead a larger crypto division. Apparently, Citadel isn’t planning to stop its crypto efforts with just a trading platform.

The news is particularly interesting given Griffin’s stance on crypto. Indeed, he has made his skepticism of the asset class known in the past. In October last year, he went so far as to say that crypto is a “jihadist appeal” against fiat currency.

Of course, he softened his stance in March, saying he “[hasn’t] was right” in the wider market. But that doesn’t mean he’s a sudden bull. Last month, Griffin called on regulators to narrow the market with more regulations. Citing the collapse of the Classic Earth (LUNC-USD) ecosystem, Griffin wants to see crypto projects forced to offer more transparency in their operations.

As of now, Citadel has not publicly announced the planned rollout of this new crypto trading platform.

As of the date of publication, Brenden Rearick had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

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Citadel Crypto Exchange On The Horizon, Despite Ken Griffin’s Skepticism


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