Ken Griffin wants the SEC to follow Citadel’s advice about DeFi

Billionaire Ken Griffin had the managing director of his market-maker Citadel write a stern letter to the SEC detailing why SEC exemptions for DeFi exchange and broker-dealer compliance are a terrible idea.

It would be much better — for Main Street investors, of course, not just for Citadel’s profits — if the SEC would limit its exemptive relief to DeFi, follow its formal notice-and-comment rule-making processes, and apply the statutory definitions of “exchange” and “broker-dealer” to many DeFi exchanges.

According to Citadel’s characterization, exemptive relief to DeFi would create a two‑tier regulatory regime for the same securities and undermine core investor protections. 

“This outcome would be the exact opposite of the technology-neutral approach taken by the Exchange Act,” Citadel wrote, “and would instead preference one technology over all others.”

DeFi cheerleaders critique Citadel’s arguments

Simplistic views of Griffin from the crypto industry cast him as a villain who uses his quantitative trading giant to extract money from everyday investors.

Griffin famously outbid an ill-conceived decentralized autonomous organization in purchasing a rare copy of the US Constitution and earned immediate ire from disappointed crypto traders.

This week, Jake Chervinsky of the Blockchain Association voiced his opposition to Citadel’s SEC request. “Who ever thought Citadel would be against innovation that removes predatory, rent-seeking intermediaries from the financial system?”

NYU Stern adjunct professor Austin Campbell echoed those thoughts. He claimed Citadel was simply cloaking an attempt to protect its payments for order flow from DeFi.