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Crypto VC Paradigm Invests in Citadel Securities or Crypto VC Paradigm Diversifies Into TradFi World or Crypto VC Paradigm Invests in Stock Market Maker Citadel Securities

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Key Takeaways

  • The crypto investment fund Paradigm, alongside VC Sequoia Capital, has taken part in a $1.15 billion investment into Citadel Securities.
  • Citadel Securities accounts for over 25% of the volume traded in U.S. equities markets, but it has faced increasing scrutiny since Robinhood restricted trading of Gamestop shares last January.
  • The market maker giant might be planning to incorporate digital assets into its business.

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Paradigm is set to take part in a $1.15 billion investment into the electronic-trading firm, Citadel Securities, with one of the United States’ largest venture capital firms, Sequoia Capital. 

A $22 Billion Valuation

One of the most prolific crypto and web3 investors, Paradigm, has diversified into the world of traditional finance. 

Today, Citadel Securities announced that it had secured a $1.15 billion investment from the crypto and web3 investment firm Paradigm, alongside venture capital firm Sequoia Capital. This investment represents the prolific market maker’s first outside investment, and the minority stake sold by Citadel Securities valued the firm at approximately $22 billion. 

According to Citadel Securities CEO Peng Zhao, the firm’s partnership with Paradigm and Sequoia should allow it to scale the business into new markets and bring in more talent. Moreover, according to The Wall Street Journal, the money raised could pave the way for the business to go public via initial public offering.

Citadel Securities is separately managed from Ken Griffin’s $43 billion hedge fund Citadel, but it is still majority owned by Griffin. While the hedge fund billionaire Griffin has historically been skeptical of cryptocurrencies, and his firms have not traded in them, it seems likely that Citadel Securities will incorporate digital assets into its business at some point. The Co-Founder and Managing Partner at Paradigm, Matt Huang, said that the partnership between his firm and Citadel Securities takes place “as they extend their technology and expertise to even more markets and assets classes, including crypto.” 

Paradigm has an extensive crypto, web3 portfolio that includes Coinbase, Cosmos, Uniswap, and Ethereum scaling solutions like Optimism and Aztec. In November 2021, the firm launched the largest crypto fund of all time, $2.5 billion dedicated to Web3 projects. 

Sequoia Capital is an American VC fund with around $80 billion in assets under management, and its investments include both Google and Airbnb before either firm went public. 

Citadel Securities, majority owned by Ken Griffin who beat out ConstitutionDAO with a $43 million bid on one of the original copies of the U.S. Constitution last November, is a market maker that accounts for approximately one quarter of the volume of shares traded on the U.S. stock market each day. While business has been good for the firm since the pandemic due to increased market volatility and trading, Citadel Securities faced scrutiny following the aftermath of the Wall Street Bets and Gamestop short-squeeze frenzy in January of last year. It was accused of—allegedly—playing a major role in the trading restrictions of Gamestop shares imposed by brokerages like Robinhood. 

The investment into the traditional markets trading firm by Paradigm marks a possible diversification from crypto-related assets, but that might change if Citadel Securities eventually does foray into the crypto markets. 

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. 

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