Citadel Securities and Soros Fund Management made crypto-related bets in Q4 2022
As the crypto industry teeters on the edge of a regulatory reckoning, Ken Griffin’s Citadel Securities and George Soros’ investment fund reported crypto-related plays in the last three months of 2022. The timing is odd given FTX’s collapse in November, but there’s no way to tell whether these bets were made before or after the crypto exchange failed.
Important takeaways
- Both Citadel Securities and Soros Fund Management reported crypto-related investments in Q4 2022.
- Citadel owns a 5.5% stake in Silvergate Bank, while Soros Fund Management made several purchases, including Marathon Digital, MicroStrategy and Silvergate Bank.
- The investments come at a time when the crypto market is rocky, and regulators are cracking down on companies that don’t comply with the law.
- The SEC has fined many crypto lenders, including Nexo and BlockFi.
Citadel and Soros Fund invest in crypto space
According to Form 13F filings with the US Securities and Exchange Commission (SEC), both Citadel and Soros Fund Management made crypto-related bets last quarter, but there is no way to determine whether they will continue to hold those positions.
Citadel reported a 5.5% stake, including option bets, in Silvergate Capital ( SI ), a well-known crypto lender. The lender is actually under investigation by the US Department of Justice (DOJ), while one lawsuit alleges that the bank “aided and abetted” FTX and Sam Bankman-Fried.
Soros Fund Management reported that it bought nearly 40 million in convertible bonds from Marathon Digital (MARA), a crypto mining company. It also bought put options for Silvergate Capital. Another indirect crypto exposure reported by the Soros fund was in software firm MicroStrategy (MSTR) where it invested in debt as well as bought 50,000 call and put options. According to its SEC filings, MicroStartegy owned about 132,500 bitcoins worth a little more than $4 billion as of December 2022.
Soros’ fund also reported buying call options in the Cathie Woods ARK Innovation ETF which also has crypto-related holdings including Coinbase.
Encryption regulation is picking up in the US
To be sure, it is not clear whether these bets were made before FTX’s collapse triggered a call for tighter regulation of the crypto markets in the US. In recent weeks, lawmakers and regulators have stepped up efforts to regulate crypto, often following controversy.
Crypto platform Kraken agreed to a $30 million settlement with the SEC and shut down its US staking-as-a-service business. The New York Department of Financial Services (NYDFS) took regulatory action against Paxos for issuing the Binance USD stablecoin.
The crux of the matter is whether cryptocurrencies are securities and under the jurisdiction of the SEC. A key development in that debate would be the outcome of Ripple vs. The SEC Lawsuit.
Although the crypto market is at a crossroads, some major players in the financial world seem keen to make a bet. Crypto could yet see more growth from institutional investment, which could help pull the market out of the slump.
