When you add more than a billion dollars in liquidity to a market maker that already executes more than one out of every four trades in the US markets on a daily basis, as well as making it the fastest growing asset class. provides access to. In modern financial history, this is not a bailout. This is a warning.
Citadel Securities announced a $1.15 billion investment from venture-capital giant Sequoia and cryptocurrency investment organization Paradigm early Tuesday, and it blew a lot of minds, even if some were clearly blown in the wrong direction.
Social media immediately sparked speculation among retail investment “apps” in response to the announcement that the funding was an emergency measure taken by Citadel Securities’ founder – and meme-stock archvillain – Ken Griffin, with the need in his mind. Huge amounts of cash to stop the MoASS or “mother of all small squeezes”.
Those principles looked like this:
And on Reddit, where the word “bailout” erupted like a rash, users best described it as “wishful thinking.”
One user on the subreddit r/GME wrote, “The citadel seems to be falling apart.” “The ones that are about to expire this month are tough, hence the bailout.”
“It’s like when Citadel and Sack ‘invested’ in Melvin,” said a different user on the subreddit r/superstonek, in notorious short seller Melvin Capital just before Griffin’s hedge fund squeezed short on stocks like Gamestop GME. Invested millions. ,
and AMC Entertainment AMC,
came to a sudden and controversial halt about a year ago. “Bullish.”
We find that Griffin is maligned by the ape community and has become a symbol of what he sees as unfair and rigged about the American financial system – and buying the Constitution didn’t help at all – but Griffin doesn’t need More money when it operates a market-making operation that is now valued at $22 billion and is a hedge fund with about $43 billion under management.
None of the talk of “bailouts” or liquidity crisis inside Citadel is based on reality, which is a real shame because the reality of this deal is much more intriguing and should dominate every meme-stock discussion on social media.
Look, this deal is not for retail investors. It’s about the rest of Wall Street. And Griffin could actually use the extra $1.15 billion to show his real rivals that he means business.
It’s been an open secret for years that Griffin wants the Citadel to be the next Goldman Sachs GS,
A financial-services superpower with a global reach that can create markets, dominate equity trading and generate great sized fund deals.
The deal gives him the liquidity to go big and overseas.
And with Goldman Sachs no longer “Goldman Sachs,” Griffin made his first investment in making it clear to all observers that the Citadel was ready to take on that mantra. (So, fair warning, Morgan Stanley MS,
Sequoia has invested in some companies that you may have heard of – Apple AAPL,
and LinkedIn MSFT,
And its reach in the fintech space is borderline infinite — to name a handful.
Paradigm fully invests in crypto and Web3 startups, giving it a valuable insight into where that space is headed, which is an interesting wrinkle for Griffin, who has been a public cynic about crypto. But it may be more open now that the paradigm is in its ear for how to take advantage of the future by creating markets that have yet to be invented.
Citadel’s coming to crypto to escape the citadel of the world will enrage those coming into crypto, but we can only imagine that once Citadel enters that market and lines up each asset class in a mayonnaise flavor. How angry would they be after blurting out.
The tie-up with Sequoia and Paradigm is now the same as that of fellow market maker Virtu Financial VIRT,
Backed by private-equity titan Silver Lake Partners years ago, if way more forward-thinking…and on steroids.
Coincidentally, or not, the store of virtue virtuous Closed over 2% on the day.
It should of course be mentioned that Sequoia is also a major investor in Robinhood Hood,
Another wrinkle that drew conspiratorial groans from the apes but is actually something that should be of far greater interest to the aforementioned Goldman Sachs and Morgan Stanleys of the world.
Now, Morgan Stanley jumped into the retail business pool with its $13 billion acquisition of E-Trade in early 2020, while Goldman, still intent on building out its consumer product Marcus, has it at its disposal. There is no such toy.
So, if Ken Griffin is going to take influence over Silicon Valley’s money and expansion, should Goldman start hitting the tires on Sequoia’s biggest fintech toy and the company that makes millions from Citadel through order flow payments? receives?
Given that Robinhood has a market cap of around $14 billion, this makes sense. And that may not be an original idea, given that Robinhood closed more than 5% on Tuesday, making it its best day in a while.
The deal is not a bailout, but a moment for many on Wall Street to see what the meme-stock trading boom has done to Citadel and begin to radically rethink Griffin’s newfound power.
There’s also rubbish out there that the venture deal offers an IPO for Citadel, but no one thinks it’s happening anytime soon, and why would that happen?
To retail investors blinded by their animosity toward “Kenny G,” we offer this final piece of advice: When you watch Griffin and the Emperor of “Star Wars” try to quell the Great Rebellion, Do not overstate this investment. Opportunity to attack a weak Emperor on an unfinished Death Star.
Check it out for what it is: a Death Star that just got a little bigger and a whole lot more operational.
When it is capable of blowing up the bulge-bracket banks by the force of its power, he is when it will be public.