SPIDERWEB: Citadel Securities Announces $1.15 Billion Investment from Sequoia Capital and Paradigm

Posted on 01/11/2022

Billionaire Kenneth C. Griffin’s Citadel Securities received US$ 1.15 billion in capital from venture capital firms – Sequoia Capital and Paradigm. Robinhood Markets, the trading app, was backed by Sequoia Capital before it went public. Citadel Securities has been criticized for its relationship with Robinhood. Citadel is a client of Robinhood in its payment for order flow business. This is the first-ever outside investment in Citadel Securities and values the company at US$ 22 billion. It is estimated that Ken Griffin will retain around an 85% stake in Citadel Securities.

Sequoia and Paradigm have made a $1.15 billion minority investment in the firm. Sequoia led the round, with the investment coming from Sequoia Heritage, Sequoia Capital Global Equities, and the Global Growth Fund. Sequoia Partner Alfred Lin will join the Citadel Securities Board of Directors. Taiwan-born Alfred Lin was the COO, CFO, and Chairman of Zappos.com until 2010. Sequoia Capital also recently opted for the status of being a registered investment adviser (RIA).

Paradigm is an investment firm focused on supporting the crypto/Web3 companies and protocols. Paradigm was founded by Fred Ehrsam, a co-founder of the cryptocurrency exchange Coinbase and Matt Huang. Matt Huang led crypo investments at Sequoia Capital.

Citadel Securities provides both institutional and retail investors with the liquidity they need to execute transactions across a broad array of equity and fixed income products. The firm has been at the forefront of the modernization of markets and market structures, which has delivered enormous benefits to investors globally.

Citadel Securities’ institutional business serves more than 1,600 clients, including many of the world’s largest sovereign wealth funds and central banks.

In January 2021, Citadel Securities had made a US$ 2 billion investment in Melvin Capital Management LP. Melvin Capital Management had been short on GameStop since 2014 and suffered massive losses. Point72 Asset Management put in US$ 750 million into Melvin Capital. In August 2021, Citadel notified Melvin Capital of its plans to retrieve US$ 500 million of the US$ 2 billion it injected in late January 2021. Both entities had invested additional capital in the fund and took non-controlling revenue shares in Melvin Capital.

Keywords: Citadel LLC, Citadel Securities.

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