A pair of former Citadel Securities employees asked a federal judge to throw out a trade secrets lawsuit, arguing their new firm operates in a market that their old one said it would never enter.
(Bloomberg) — A pair of former Citadel Securities employees asked a federal judge to throw out a trade secrets lawsuit, arguing their new firm operates in a market that their old one said it would never enter.
Citadel Securities sued former European executives Leonard Lancia and Alex Casimo in New York in May, saying they started raising capital for their firm, Portofino Technologies, while they still had access to Citadel Securities proprietary information. In court filings Tuesday, Lancia and Casimo said they left their jobs in March 2021 because they were unhappy with the “limited resources and the low priority” that had been given to their business and were considering starting a company that would use high-frequency trading to make markets in cryptocurrency – something Citadel had “publicly and vehemently vowed it would not do.”
But almost a year later, Citadel Securities changed its mind, acknowledged it had made a mistake and began harassing Portofino, its founders and “anyone who dealt with them.” Citadel Securities started an arbitration case in London in June 2022, and then filed the New York suit, apparently unsatisfied with the proceedings in Europe, the pair said in Tuesday’s filings.
The suit “is full of baseless insinuations, calculated distortions and outright falsehoods,” Lancia and Casimo said. They argued that the case should be thrown out because the conduct took place in London or Switzerland and there is no evidence that Portofino took or is using Citadel Securities’ trade secrets.
“These allegations are clearly meant to intimidate other Citadel Securities employees who are thinking about jumping ship,” according to the motion. “No matter how much plaintiffs may wish it otherwise, they do not own their employees.”
Citadel Securities made its first public push into crypto last year, backing a trading platform for digital assets alongside Virtu Financial Inc. and retail brokerages Fidelity Investments and Charles Schwab Corp. Ken Griffin, the market maker’s founder, once described the rush to embrace cryptocurrencies as a “jihadist call” against the U.S. dollar, though his view on digital currencies has since evolved.
The company rejected Lancia and Casimo’s allegations in a sternly worded statement, saying that Citadel Securities has “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.”
Lancia, Citadel Securities’ former head of Europe systematic market making for derivatives, and Casimo, who was with the firm’s business-management team in Europe, founded Portofino in April 2021. The firm provides crypto liquidity to financial institutions and high-net-worth individuals through trading on centralized and decentralized exchanges and over-the-counter and also provides advice and technical support for web3 startups seeking to list their assets on exchanges.
Citadel Securities says in the suit that an internal investigation revealed messages about early fundraising efforts by the pair months before they announced their intent to depart.
Citadel Securities previously filed a non-compete complaint against another former employee who later joined Portofino, Vincent Prieur, which was settled out of court.
Lancia and Casimo said in September that Portofino was backed by $50 million from venture capitalists including Coatue Management, Valar Ventures and Global Founders Capital. Based in Zug, Switzerland, it has 35 employees, including in London, Singapore and New York, and aims to expand to 50 by the end of the year.
The case is Citadel Securities Americas LLC v. Portofino Technologies AG, 23-cv-5222, US District Court, Southern District of New York.
(Adds Citadel Securities statement in seventh paragraph)
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