Citadel CEO outbids 17,000 crypto investors after winning Short Squeeze Lawsuit

Rick Steves

Citadel Securities has been a key source of trading platforms’ revenue, which fed conspiracy theories that the US market maker leaned on their executives to end the short squeeze by restricting users from buying meme stocks.

Ken Griffin, Chief Executive Officer of Citadel, one of the many defendants of the Short Squeeze lawsuit that came to an abrupt end last week, paid $43.2 million for a first-edition copy of the U.S. Constitution at a Sotheby’s auction.

The Citadel CEO outbid 17,000 crypto investors who had banded together to raise more than $40 million on social media. The auction took place shortly after the win over the many plaintiffs who have filed a putative class action in the aftermath of the infamous January short squeeze.

“The U.S. Constitution is a sacred document that enshrines the rights of every American and all those who aspire to be. That is why I intend to ensure that this copy of our Constitution will be available for all Americans and visitors to view and appreciate in our museums and other public spaces”, said Griffin said in a statement.

Citadel: “No basis for conspiracy theories”

Last week, the federal court in Miami found no evidence of collusion in the chaotic short squeeze, but many retail investors on social media continue to believe that they acted in concert during the meme-stock frenzy.

“We are pleased that the court agreed that there is no basis for the plaintiffs’ conspiracy theories and summarily dismissed the case,” Citadel Securities said in a corporate statement.

34% of Robinhood’s revenue derived from transactions with Citadel. Further, Apex sent 23.26% of clints’ orders in S&P 500 stocks and 13.26% of order flow for non-S&P500 stocks to Citadel Securities in January 2021.

As such, Citadel Securities has been a key source of these platforms’ revenue, which fed conspiracy theories that the US market maker leaned on their executives to end the short squeeze by restricting users from buying meme stocks.

The complaint also cited communications between Apex and Robinhood in which the latter was warned that retail investors found a loophole around trading restrictions it imposed. While this fanned the flames of those theories and plaintiffs claimed it shows Apex was “policing the conspiracy,” the court said helping a competitor prevent fraudulent conduct is not an antitrust violation.

Commenting on documents revealed in the lawsuit, which allegedly show conversations between top executives at Robinhood and Citadel, the judge said it only added extra drama to conspiracy claims.

“Admittedly, these emails may be somewhat suspicious given the participants and their timing. But are a few vague and ambiguous emails between two firms in an otherwise lawful, ongoing business relationship enough to “nudge Plaintiffs’ claims across the line from conceivable to plausible,” the ruling further reads. The proposed class action labeled these communications as conspiracies.

Short squeeze lawsuit isn’t over yet

The civil case was dismissed without prejudice, giving the plaintiffs until December 20 to possibly file an amended complaint, then the prosecutor has the option of re-filing the charges.

A separate investigation by the US securities regulator also found no evidence of the so-called “gamma squeeze,” which is caused by the “naked short selling,” where investors short sell shares that have not been affirmatively determined to exist.

Rather, the agency asserts the momentum seen in meme stocks was entirely driven by the retail community, including when they forced hedge funds to cover their short positions. The SEC’s report also describes a process in which massive trading volumes forced retail brokers to temporarily stop or limit offering meme stocks due to capital requirements.

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