Incumbents across capital markets and banking are struggling to stem the departures of staff to cryptocurrency firms. Last week market maker Citadel Securities (Citadel) applied for a restraining order against Vincent Prieur, an ex-employee that joined Swiss-based startup Portofino.
The new company, a cryptocurrency market maker, was founded by ex Citadel Securities personnel Leonard Lancia and Alex Casimo. Two weeks ago, it announced a funding of $50 million from Valar Ventures, Global Founders Capital and Coatue. Whereas Casimo and Lancia left Citadel Securities in March 2021, Prieur departed a year later.
In court documents, Citadel Securities described Portofino as “a key competitor that was deceptively and surreptitiously formed by other former Citadel Securities executives.”
Prieur’s departure in March this year is claimed to have happened four days after Citadel Securities’ first systematic crypto trade, which was executed in Asia. However, Prieur resigned in January and was requested to stay on to train his replacement. Citadel claims Prieur is a key member of the team that developed its crypto strategy, citing an annual performance evaluation in which Prieur said his top accomplishment was “lead CitSec’s foray into crypto”.
In his opposition response, Prieur’s legal team claims he did not “have any responsibility whatsoever for any cryptocurrency-related matters.” He asserts that his role in cryptocurrency was “reviewing publicly-available information, published openly by public exchanges, regarding the procedural mechanisms for registering to trade cryptocurrencies on those exchanges. Prieur did not (for example) consider or present any strategies on how Citadel should trade cryptocurrencies, or what clients or methodologies should be considered, or anything of the sort.”
Additionally, Prieur asserts that his non-compete covers relying on confidential information or working in a capacity similar to his one at Citadel. He claims that the so-called confidential information relates to registering as a crypto exchange, something that was specific to Citadel and which Portofino has already done and had already traded billions before his joining. He notes that Citadel Securities is a market maker in fixed income and equity, whereas Portofino is a market maker for cryptocurrencies.
Prieur’s legal team requested the production of a powerpoint which is meant to be his crypto-related work product, but Citadel declined to do so. Prieur’s side claims this is because “the facts show that Prieur did not create or possess any proprietary information that might possibly warrant an injunction against him.”
They state that in the summer of 2021 Citadel Securities moved its cryptocurrency initiative out of the U.S. to Asia, “where an entirely new and separate designated team in Asia led (and is continuing to lead) Citadel’s efforts to explore and pursue any crypto- currency business divisions from that point forward. Prieur did not relocate to Asia to remain a part of that team, and his involvement (such as it was) in Citadel’s ‘crypto operations’ then effectively was reduced to 0% of his working time.”
The hearing is set for tomorrow.
Meanwhile, earlier this month, Citadel Securities was disclosed as one of the backers of a new digital asset exchange EDX Markets, alongside Charles Schwab, Fidelity Digital Assets, Virtu Financial and others.
Our own experience is that Citadel Securities can be very aggressive. After a non-controversial piece about the launch of EDX Markets, Ledger Insights was contacted on multiple occasions by two separate companies acting on behalf of Citadel Securities. We made one small change but declined to remove a reference to Citadel Securities initiating the consortium as we believe this is factually accurate. The companies did not claim it was inaccurate but nonetheless continued to press for the change, which in our view, was inappropriate.