Citadel urges SEC to regulate DeFi like TradFi, prompting Hayden Adams to accuse the firm of attacking open, peer-to-peer finance.
Summary
- Hayden Adams accused Citadel and founder Ken Griffin of attacking DeFi developers by asking the SEC to treat them as traditional intermediaries and claiming the firm has quietly lobbied on this for years.
- Citadel’s SEC letter argues DeFi venues and actors (from front-end operators to validators and LPs) effectively function as exchanges or broker-dealers and should face technology-neutral regulation, including for tokenized equities.
- The firm warned that tokenized U.S. stocks on DeFi could create a shadow equity market and opposed broad exemptions sought by crypto industry groups, a stance critics say could force DAOs and protocol teams into full broker-dealer style compliance.
Uniswap founder Hayden Adams has publicly criticized Citadel Securities following the market maker’s submission to the U.S. Securities and Exchange Commission urging regulators to treat decentralized finance protocols and their developers as traditional financial intermediaries.
Adams posted his response on social media platform X, stating that Citadel founder Ken Griffin “screwed over Constitution DAO” before “coming for DeFi, asking the SEC to treat software developers of decentralized protocols like centralized intermediaries,” according to the post. Adams also suggested that Citadel has been “lobbying behind closed doors on this for years.”
Adams specifically targeted a passage in Citadel’s filing that claimed DeFi cannot provide “fair access” to markets, calling out what he described as the “nerve” of the argument. He characterized Citadel as “the king of shady tradfi market makers” that opposes “open source, peer-to-peer tech that can lower the barrier to liquidity creation,” according to his social media posts.
Hayden Adams and Citadel Securities
The dispute centers on a letter Citadel Securities submitted to the SEC regarding tokenized equities and DeFi trading venues. In the document, the firm argued that many decentralized systems bring together buyers and sellers in a coordinated manner and therefore meet existing legal definitions of exchanges and broker-dealers.
Citadel’s submission states that DeFi activities should not receive different regulatory treatment simply because they are implemented through blockchain code. The firm identified multiple participants in the DeFi ecosystem, including trading interface operators, smart contract developers, validators and liquidity providers, as potentially subject to regulation.
According to the filing, many of these actors collect transaction-based fees or influence order routing, making them functionally similar to regulated financial intermediaries. Citadel urged the SEC to apply a technology-neutral regulatory approach that subjects the same activity to identical rules regardless of the underlying technology.
The letter emphasized concerns about tokenized stocks, warning that allowing tokenized shares of U.S. companies to trade on DeFi protocols could create what Citadel described as a shadow equity market outside the national market system. The firm stated such a structure could fragment liquidity and circumvent existing reporting, surveillance and investor protection frameworks governing equities.
Citadel opposed requests from crypto industry groups for broad exemptions, which have argued that open source protocols and validator networks do not operate like traditional intermediaries and should not be required to register as exchanges or broker-dealers.
The firm contended that the SEC lacks authority to establish a separate regulatory regime for tokenized equities and stated that fundamental changes to U.S. stock trading should be addressed by Congress.
If regulators adopt Citadel’s framework, protocol development teams, front-end operators, routing wallets, market makers and potentially decentralized autonomous organization participants could face registration requirements, capital rules and best execution obligations designed for broker-dealers, according to industry observers.
Adams referenced a 2021 incident in his social media post, noting that Griffin outbid ConstitutionDAO at a Sotheby’s auction for a rare copy of the U.S. Constitution, preventing the crypto collective from acquiring the document.
