Citadel Securities Is Building a Crypto Trading Marketplace With Virtu Financial: Sources

U.S. electronic trading giant Citadel Securities is building a “cryptocurrency trading ecosystem” with the help of high-frequency trading and market-making firm Virtu Financial, as well as venture capital firms Sequoia Capital and Paradigm, according to a source familiar with the plans. Citadel Securities is the sister company to hedge fund giant Citadel.

The firms in Citadel Securities’ initial consortium will be joined by additional wealth managers, market makers and other industry leaders that are expected to join the marketplace ahead of launch, the source added.

“This marketplace is intended to create more efficient access to deep pools of liquidity for digital assets. So a group of industry leaders are working closely together to facilitate the safe, clean, compliant and secure trading of digital assets,” the source told CoinDesk.

The current crypto market structure is deficient and inhibits wider adoption from a lot of investors, which is what Citadel Securities’ trading consortium is addressing, the source said. “It’s more of a crypto trading ecosystem or marketplace than an exchange. It’s going to take on the exchanges by building a better mousetrap.”

A second person told CoinDesk that Citadel Securities had been “quietly hiring executives” to build out a crypto trading stack. A third source said the firm is in discussions about “a huge amount of systematic internalizing involving [Citadel’s] sister companies.”

Citadel Securities, of course, is helmed by crypto skeptic Ken Griffin, who scuttled ConstitutionDAO’s efforts to buy an original copy of America’s founding document. Though he had earlier said crypto was a “Jihadist call” against the U.S. dollar, his firm has since announced plans to make markets for various cryptocurrencies.

Virtu is known to be involved in market making for crypto futures products and exchange-traded funds (ETFs) in Canada. The firm was also said to be carrying out crypto market making on Coinbase and Gemini, The Block reported.

In January of this year, Sequoia and crypto VC firm Paradigm invested $1.15 billion in Citadel.

Citadel Securities declined to comment. Paradigm declined to comment. Virtu Financial and Sequoia Capital did not return requests for comment by press time.

CORRECTION (June 7, 18:40 UTC): Corrected name of firm to Citadel Securities throughout; corrected name of Citadel and Citadel Securities founder to Ken Griffin; and corrected size of January investment to $1.15 billion, not $1.5 billion.