Alex Casimo and Leonard Lancia founded Portofino Technologies.
Ken Griffin has made some scathing comments about cryptocurrencies in recent years.
The billionaire founder of the hedge fund Citadel and Citadel Securities, the market-making firm based in Miami, said in October 2021 that due to the “lack of regulatory certainty around cryptocurrency, we just aren’t involved today.” He added: “I just don’t want to take on the regulatory risk in this regulatory void that some of my contemporaries are ready to take on.”
Griffin also described crypto as “a jihadist call” against the US dollar.
Alex Casimo and Leonard Lancia did not share the same view of crypto. They left Citadel Securities Europe in March 2021 and the following month founded Portofino Technologies, a Swiss-based start-up that’s developing high-frequency trading-grade technology for digital assets.
They publicly announced their new venture in September 2022, along with funding of more than $50 million from outfits including Valar Ventures, Global Founders Capital and Coatue.
Valar’s founders include Peter Thiel, while Global Founders has invested in companies including Slack, Zalando and HelloFresh over the past two decades.
The venture has faced legal challenges by Citadel Securities, whose European arm filed a case in London in June 2022.
According to Portofino, Citadel’s core complaint is that “Lancia and Casimo allegedly violated their employment agreements by soliciting Citadel Securities employees” – a claim they reject.
A hearing at the London Court of International Arbitration is scheduled for May next year.
Citadel has not been content to only contest the matter in Europe. In May this year it began legal action against Portofino in the US as well when it sued the start-up in New York, claiming the founders had stolen “trade secrets” and told “bold-faced lies to their colleagues about their activities and intentions.”
Portofino said in its initial response that Citadel’s legal action was “unmeritorious, anticompetitive and a classic example of corporate bullying.”
“Intimidation and interference”
The latest chapter in the wrangling came this week when Portofino filed a motion in the US District Court for the Southern District of New York to dismiss the suit. It argues it’s a European dispute, and that Citadel Europe had chosen to first take action in London.
Portofino also stated a desire to conclude the London case as quickly as possible so it could “proceed with its day-to-day business free of Citadel Securities’ intimidation and interference.”
Portofino said there’s no evidence it had stolen trade secrets and that the allegations were “clearly meant to intimidate other Citadel Securities employees who are thinking about jumping ship,” per the motion.
The motion also points out that after Griffin made his comments in October 2021, “Citadel Securities apparently had a change of heart about crypto.” In March 2022, Griffin told investors that the firm needed to give “serious consideration” to becoming a market-maker in crypto.
Per the motion, in December 2021 “Citadel Europe’s outside counsel began “demanding information from Portofino and its founders, and soon after began shaking down Portofino’s recruiters, investors, and potential investors for information about Portofino, including by threatening litigation.”
In January 2022 Griffin sold a $1.2 billion stake in Citadel Securities to venture capital firms Sequoia and Paradigm. CEO Peng Zhao said at the time the funds would help Citadel expand into new asset classes. Matt Huang, the Paradigm cofounder, said that expansion would include crypto, the Financial Times reported.
“Long track record of supporting employees”
A Citadel Securities representative told Insider in a statement that Lancia and Casimo “secretly designed and launched” a crypto market-making firm while employed by Citadel, and “lied to colleagues and held clandestine investor meetings during which they touted the access and the advantages they gained from working here.”
“Further, their attempt to improperly poach Vincent Prieur, a New York-based employee described as the ‘aggregator of all things crypto’ at Citadel Securities, is undisputed. We have a long track record of supporting employees who choose to start their own businesses – but when they brazenly engage in deception to do so, we will hold them accountable.”
Prieur, who later joined Portofino, had also been the subject of legal action by Citadel Securities that was settled out of court, Bloomberg reported.
A representative for Portofino told Insider in an email that Lancia and Casimo “firmly deny” all the allegations made by Citadel Securities.
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