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His fund made more money than any other hedge fund in the history of the world —over $90 billion in profits. More than Soros, more than Dalio, more than anyone who has ever played this game. There is no other story of capital accumulation like it in monetary history, and it was created in the most competitive arena on Earth, where every competitor tries to take everything from you every day.
Every time something died on Wall Street —Enron, Amaranth, Lehman, Melvin—Ken Griffin only got richer. At a certain point, people stopped calling it luck. That's when the conspiracy theories began . He was called the most powerful man in American finance. He was called the most hated person on the internet.
But it was never called wrong for long. His name is Ken Griffin, and this is the story of Citadel. Boca Raton, Florida—a city where middle-class comfort and big money live on the same streets. Ken Griffin's father is an engineer. The family is not rich, but they are close to the rich. And for a certain type of guy, this distance becomes a driving force.
Griffin is the president of the math club . While his classmates fry burgers, he runs a mail-order software business from his bedroom: inventory, margin, customers who never see his face. He is 17 years old. Being a computer geek has obviously turned out to be a pretty advantageous position in life.
And yes, I was very interested in both math and programming in high school. And it defined my career and played a very important role in my life. In 1986, as a freshman at Harvard, he read an article in Forbes criticizing the Home Shopping Network. Griffin decides that the stock is overvalued and bets against it with put options.
The bet wins. But he doesn't remember the profit. He remembers the brokerage commission. Most children celebrate their first successful trade. Griffin was angry about the middleman's share. 20 years later, he built Citadel Securities, a middleman-replacing machine, out of the same irritation. Angry about the fees, Griffin goes to the Harvard Business School library and studies finance theory on his own.
Then he creates his own pricing model for a little-known instrument that most of Wall Street doesn't bother to understand. Convertible bond. A convertible bond is a corporate loan with an added stock option. Proper assessment means assessing both parts at the same time, and in the 80s, the large institutions that held them mostly didn't bother with that.
The market was selling dollar bills for 90 cents to anyone with enough math knowledge to notice. Griffin had this knowledge. Now he needs money. And that money is about to walk through the doors of a bank in Palm Beach. Summer of 1987. After returning home from college, Griffin visits a broker friend at First National Bank of Palm Beach and begins to explain his bond model.
A retiree named Saul Golkin walks inside. He listens for 20 minutes. As he walks out the door, he puts his money in. Family and friends add the rest. Including Griffin's grandmother, who puts her savings into the hands of her grandson. A total of $265,000. Griffin is 19 years old. Managing Grandma's money made the whole thing more personal.
Every risk system that Citadel builds over the next 40 years exists to deliver on that same promise. Grandma's money shouldn't turn into zero. Returning to Harvard, he faces a problem. He needs real-time market data , and the university prohibits students from running a business on campus. So Griffin starts lobbying.
He argues that the foundation, like the Florida partnership, is technically an off- campus activity. The administration is giving up. A satellite dish appears, hanging from the third-floor window of Cabot House, pulling stock quotes from the sky. This plate told everything about the next 40 years. Where others saw rules, Griffin saw obstacles that could be circumvented.
He didn't break Harvard rules. He reinterpreted reality so that the rules stopped working. Regulators will have to deal with this kind of mindset for decades. The plate was installed in the fall of 1987. The timing is almost supernatural, as the worst day in stock market history is just weeks away. October 19, 1987.
Black Monday. The Dow Jones Industrial Average falls 22.6% in a single session—the worst one-day crash in history. As the Dow Jones Industrial Average entered a fear-fueled free fall, closing at a record low of 508.32 points, panicked traders worked their lunch breaks in a desperate but futile attempt to keep up with tickers that were recording record trading volumes.
Fortunes that had been built over decades were gone before dinner. In a dorm room in Cambridge, a 19-year-old watches the numbers roll in, with $265,000 of other people's money at stake, including his grandmother's savings. But Ken Griffin won't lose. He entered this storm with short positions —bets that make profits when markets fall.
While grown men cry on the floor of the New York Stock Exchange, a teenager makes money . This is the most important day of his life, and nothing about it is normal. His first real market experience is a disaster that makes him money. At 19, he learns that panic is the transfer of wealth from the unprepared to the prepared.
Every fortune he earns later is the same lesson, but on a larger scale. By the time he graduated in 1989, with a degree in economics earned in 3 years, Griffin managed two funds and approximately a million dollars. His track record is real, proven, and stable, delivering 2 consecutive years of profits while still attending Harvard full-time, proving to serious investors that this is not luck.
Repeatability of results is the only thing investors really pay for, and one person pays close attention to it. Chicago hedge fund pioneer Frank Meyer is about to bet his entire life on a 21-year- old. Chicago, 1989 . Frank Meyer, co-founder of Glenwood Capital, does something no respectable institution does.
He gives a 21-year-old guy a million dollars of the firm's capital and tells him to trade. In the first year, Griffin makes 70% of the profit. Meyer later admits, "If you told him he would stake his reputation on a 22- year-old, he would say, 'No way.'" Then he met Ken Griffin. Notice what Griffin refuses.
With such indicators, Goldman Sachs and the big New York houses are open to him. He chooses Chicago because in New York he would be a mercenary in someone's car. In Chicago, he owns this car himself. Meyer gave him something more valuable than a million— business architecture. Don't build a fund with one strategy.
One advantage dies with one market. Build a platform from many strategies that are independent of each other. And here's what's amazing. The 22-year- old realized that his winning strategy had an expiration date . Almost no one does that. November 1990. With $4.6 million , most of which belongs to Meyer, Griffin opens his own firm.
Five people, 3,000 square feet in the Chicago Loop. He is 22 years old. The first full year brings 43% profit. The second one is 40%. The miracle boy doesn't lose. 43 and 40% in a team of five trading instruments that are ignored by big players. This is what true advantage looks like: not luck, but a structural error in asset valuation plus better mathematics used systematically .
The only real question was how much it could scale before this inefficiency disappeared. But the winning streak has a hidden poison. Because Griffin now believes he can't lose. In 1994, the market would force him to reconsider this belief and nearly destroy the firm. Inside the firm, Griffin is building something that Wall Street doesn't yet respect.
While the kings of the era, Soros and the macro- vultures, trade on intuition and geopolitics, Griffin hires a former Soviet rocket engineer to build models. He is betting that the future lies with the machine, not intuition. And now it's 1994, the Federal Reserve is raising rates. Bonds and stocks fall together.
For the first time in his life, Ken Griffin loses money—minus 4%. 4% sounds like nothing. But that's all. Investors are fleeing. The 25-year-old flies to Geneva and Zurich, begging skeptical private bankers for capital. Some say no. He flies to the next one. Access to capital has never been as easy as it is today.
Here's the lesson that sets Griffin apart from every manager who has since collapsed. He didn't blame the market or change his presentation. He studied the real problem. The problem wasn't 4%. And the fact that clients could withdraw capital at the worst possible moment, forcing him to sell good positions at bad prices.
Griffin makes a conclusion that will define the next 30 years. The enemy is not the loss of money. The enemy is other people's right to panic. That same year, he renamed Wellington the Citadel—a fortress within a fortress. A structure created with one purpose: to survive while the city around it burns.
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Check it out using my link in the description. 1998: Citadel gives investors a choice: lock up money for years or keep quarterly access, paying penalties for early withdrawal. This is an outrageous demand. Hedge fund clients hold the leash. They shouldn't be on it. The 29-year- old is telling the richest investors on the planet that they may not get their money back.
And most of them agree. This is the most underrated risky decision in the history of hedge funds. Blocked capital is not about control for the sake of control. It changes what you can experience. If customers can't withdraw their funds, you'll never be a forced seller during a panic, which means that in a panic you become something much more dangerous —a buyer.
Within a few weeks, the timing is justified with a precision that looks like it's scripted. Long-Term Capital Management, a fund led by Nobel laureates with 25-to- 1 leverage of $125 billion , collapses . Everything the fund owned —risky assets— fell in value, while everything they sold “ short”—risk-free government debt— rose, resulting in a $4 billion loss that brought the fund to the brink of collapse.
This collapse sets off a chain reaction. Funds everywhere are facing withdrawals, forcing them to hold sales at rock- bottom prices. The entire industry is selling assets at any price. Citadel capital is blocked. Citadel doesn't have to sell anything. Understand the mechanics. This is the highlight of Griffin's entire career.
LTCM's positions were not all wrong. Many of them were successful deals owned by a doomed owner. When leverage forces liquidation, the price breaks away from value. You can buy a dollar for 50 cents. While Nobel laureates are liquidating assets, a guy from Boca Raton is going shopping. Citadel ends 1998 with a 30% profit, and Wall Street quietly gives the firm a new nickname—“the grave dancer .” Mr.
Lay, I regret that you have chosen not to explain to this committee, the American public, and your former employees how you and other senior executives at Enron clearly failed in their duties. December 2001. Enron, the world's largest energy trader, collapses in the largest bankruptcy in U.S. history.
20,000 employees. The world sees fraud, shame, ruin. Ken Griffin sees a talent auction. The collapse of the deal between Enron and Dynegy left Enron employees stunned. Many of them wonder if they will receive their next paycheck. Late tonight, the company announced that neither CEO Ken Lay nor any other company representative would be present to answer questions.
Days after the bankruptcy, Citadel recruiters descend on the defunct Enron trading floor. They conduct hundreds of interviews and notice who Griffin hires: not boastful traders, but quantitative researchers and meteorologists. Hiring meteorologists sounds silly until you understand energy markets. Natural gas is a bet on the weather.
Demand depends on winters and hurricanes. Enron scientists understood the physical world better than anyone in finance. Griffin bought this knowledge from the wreckage for pennies without any scandal. These hires became the foundation of a commodity business built on the intellectual remnants of America's most disgraced company .
It can wait almost 20 years and then bring in billions in one year. This is a model that investors should explore. Griffin doesn't just buy distressed assets. He hires problem talent. People become undervalued in a panic, just like bonds. And unlike bonds, a great researcher works for decades to achieve results.
The Enron raid may have been Citadel's most profitable deal, but Griffin's next brainchild didn't rise from the grave. It grew out of his own old grudge and began again with a commission he refused to pay. 2002, Citadel is already trading billions in options. And broker- dealers take their share from each transaction.
The same broker's commission that pissed off an 18- year-old guy on his first successful deal. Griffin's response is not a complaint. This is a declaration of war. He creates his own market maker to do the work himself. He calls it Citadel Securities. Our deep heritage in software development and predictive analytics was to make us the market maker of the future.
A market maker is like a casino that always wins. He spends the whole day setting buy and sell prices for thousands of securities and making money on the tiny difference between them—the spread. A penny a deal, but if you do it millions of times a day, faster and more accurately than others, those pennies become an empire.
The timing is perfect. Options trading is moving from noisy platforms to electronic screens, and electronic markets reward exactly what Citadel has been building since the dorms: better models, faster machines. We have moved from a world where you call a broker who calls another broker who goes to a specialist to execute a trade, to an electronic world of direct trade execution.
In other words, you enter an order on the computer, boom—and it’s executed in a split second. Almost no one notices this side project. In two decades, it will cover every fourth stock trade in America, make Griffin the most hated person on the internet, and generate more profit than Goldman Sachs. Founders talk about vision, but better pay attention to what annoys them.
Home Shopping Network commission, brokerage commission. Griffin's biggest business is built on the 20-year-old's frustration with middlemen. And when he couldn't get a fair price from the toll collectors, he didn't negotiate. He himself became a toll road. By 2003, Forbes named him the youngest billionaire on the 400 list, with a fortune estimated at $650 million at age 34.
This wonder boy has it all. And he's about to start circling the biggest hauls of his career. September 2006, Amaranth Advisors, a $9 billion fund, is destroyed in real time by one man's bet on the weather. Star trader Brian Hunter created a colossal position on natural gas spreads, betting that winter prices would rise sharply compared to summer prices.
This bet needed hurricanes , cold, and fear. Instead, the 2006 hurricane season appeared to be historically calm. Hunter didn't bet on rising gas prices. He was betting on the difference between two months of delivery. When the weather remained calm , this gap disappeared, and his position was so huge that he could not get out of it without the market collapsing against him.
In one of its worst days, Amaranth lost $560 million. $6 billion evaporated in a matter of days—one of the fastest wealth destructions in hedge fund history. Amaranth had to sell its entire energy portfolio immediately or die with it . And every buyer on Wall Street knew it . Citadel and JP Morgan are taking the entire portfolio at a huge discount— it's one of the largest commodity deals in history.
When positions normalized, each of them was rumored to have earned about a billion dollars. Citadel also absorbed the talented surviving employees of Amaranth. Pay attention to the profit mechanism. The Amaranth deals weren't completely useless. The deceased held both good and bad positions. A dying seller has no negotiating leverage.
The discount Citadel received was n't for assets, but for speed, size, and confidence—for being the only way out of a burning building. Scientists from Enron evaluated this portfolio. Blocked capital ensured its implementation. Every detail of the fortress worked as intended. And 10 months later, the phone rings again at 3:30 in the morning.
July 2007. The first shocks of the credit crunch are passing through the system. So Wood Capital, a Boston fund backed by $500 million from Harvard's endowment, loses half of its $3 billion in less than a month. So Wood needs a buyer for his wounded briefcase tonight. Every firm on Wall Street knows about this, and every firm has already gone home.
But not Citadel. Griffin's team works through the darkness, valuing a portfolio that the market has declared unvalueable , and putting out a proposal at 3:30 a.m. The deal is closing. When markets recover, Citadel records huge profits on the corpse. Evaluating a distressed portfolio overnight is extremely difficult.
Thousands of positions, frozen markets, no reliable quotes. You need models that you trust more than market panics, and capital that cannot be withdrawn . Until 2007, Citadel was the only firm that had both, plus the willingness to work while everyone else was asleep. And Citadel is not embarrassed by this time in the logs.
Here's what you should know about their culture. Citadel is so proud of the 3:30 a.m. deal that it is mentioned in the firm's official history. Moose and Suse hide the fact that they are profiting from the night panic. Griffin is advertising this because to him it's not something to hide, it's the whole business model.
It works exactly as intended. Three corpses in five years. Enron, Amaranth, Sowood. Each rescue makes the Citadel richer, and each teaches Griffin the same silent, fatal lesson. Disaster is what happens to other people. He is about to test this belief with the biggest purchase of his life. The most toxic assets of the sinking company have been transferred to his own balance sheet.
I said, “On the floor!” » Now just give the money to the cashiers. Are you being robbed by your bank? Madam, don't stay here. Come to E*TRADE, get six times the national average savings rate and easily use the free November 2007. Online broker E*TRADE is bleeding. Its balance sheet is clogged with mortgage-backed securities rotting from within, and clients are fleeing over rumors of collapse.
Griffin leads a $2.5 billion rescue operation, taking the toxic mortgage portfolio from E*TRADE at a sinking-person price. His public statement exudes confidence. The deal will restore trust and restore strength to the company. Read the statement carefully. Griffin learns a new language: white knight, systems stabilizer.
He will need every word of it in the 12 months that follow, when the sinking organization becomes his own. Markets have a long memory for such irony. But within the triumph lies a detail that almost no one properly appreciates. Those poisoned mortgage assets now live on Citadel's own balance sheet .
A balance with a risk of approximately $7 for every $1 of capital. Leverage is an amplifier without a mind of its own. At a ratio of 7:1, a 10% profit on your positions approximately doubles your capital. And a 10% loss almost wipes it out. This is rocket fuel in calm markets. During a crisis, it transfers control of your firm to creditors.
Citadel lent money like an investment bank, without the government safety net of a bank. At the end of 2007, the portrait looks brilliant. 39 years old. Approximately 3 billion dollars. One loss-making year. One loss-making year in 17 years. The winner of Enron, Amaranth, Sowood, E*TRADE, publicly declares that Citadel will become the Goldman Sachs of the 21st century.
The gravedigger profited from every autopsy on Wall Street . But he missed the most common cause of death. Intelligent people who believed that their models had tamed the risk. In 9 months, panic will follow him. And this time the panic will be justified. July 2008. Quietly, Citadel reports a loss-making month.
Then another one. Griffin uses his oldest trick, buying depreciated convertible bonds—the tool of his youthful genius. This time, what has depreciated continues to become cheaper. I would describe those 30 years as having had a few setbacks, and then there was a moment in 2008 when the car actually went off the cliff.
For the first time in 18 years, the market is telling Ken Griffin that his signature move is wrong. He reacts the way winners in life react. He's doing it on an even bigger scale. Then, on September 15, Lehman Brothers collapses, and the world Griffin valued ceases to exist. The stock market has experienced one of its worst days in recent years.
The Dow Jones Industrial Average fell more than 490 points. This is the sixth largest drop in points in history. And we know now that the collapse of Lehman Brothers did indeed freeze credit markets, of course, it did indeed help trigger the worst financial crisis since the Great Depression. The convertible bond market did not collapse.
It has actually closed. No buyers at any price. Meanwhile, Citadel brokers reduced the value of these unsold positions and demanded cash collateral for them. Margin requirements. At 7:1 leverage, it's a death spiral . Losses cause cash demands, cash demands force sales, sales deepen losses. Every diversified strategy fails at the same time.
Stocks, loans, everything. Correlations are reduced to unity. E-Trade's mortgage portfolio is bleeding. October, minus 22%. November, minus another 14%. At its worst, Citadel loses hundreds of millions of dollars a week. Here is a rough understanding of these models. Diversification is a friend only under favorable conditions.
Citadel held dozens of uncorrelated strategies, but at their core they had one hidden bet: that the financial system continue to function. During a systemic crisis, every position becomes the same. By November, flagship funds had fallen 55%. $8 billion of client money disappeared. A firm named after a fortress surviving in a burning city now finds itself in the middle of the fire.
And Wall Street is starting to place bets on the date of her death. There's a number that tells Wall Street who will die next—the price of insurance on a firm's debt. Credit default swaps. Yes. I mean, the most important part of a credit default swap is the reference to the underlying entity or reference entity for the transaction.
And in October 2008, Citadel's bond insurance was trading at prices worse than Lehman's on the Friday before they filed for bankruptcy. Remember the 2006 public bonds issued by Lehman itself? This debt had a public price that was updated every hour. Griffin installed a heart monitor on his own firm and connected it to every trading platform on Earth.
Now he broadcasts his chances of death, and the fear of failure leads to failure itself. Creditors are closing lines. The prophecy is self- fulfilling . Rumors travel in droves. Citadel will be on the same list as Bear Stearns, Fannie, Freddie, AIG. Investors are demanding 1.5 billion for withdrawal.
Former employees will recall how Griffin was one step away from closing the firm. He would call it his lowest point. According to him, it was humiliating. Tonight, the Wall Street gossip network has a new target after the collapse of Lehman and AIG. Rumors are circulating on the trading floors about unprecedented liquidity pressure at Ken Griffin's Citadel.
Then a trading partner from Citigroup, James Forese, reveals to him the truth that the rumor market cannot see. Citadel's actual cash position is fine. Fiction is killing the company. And the only antidote is something the mysterious hedge fund never does . Go public. Griffin, naturally secretive, holds an open conference call.
He introduces the market to Citadel funds step by step. The rumors die down in a few days. The company is stabilizing. The fortress was saved by opening the gates and showing the supplies in the granary. This is one of the strangest survival stories in finance. Transparency as a weapon of last resort.
When your debts are tracked publicly, silence is perceived as guilt. Griffin understood this on an intuitive level. Information is liquidity. The conference call was worth more than any asset sale. He overestimated fear itself. Fiction is dead. Arithmetic—no. His clients still want their money back, $8 billion.
And Ken Griffin is going to tell every one of them, "No." The rumors have been dispelled. But the mathematics of death remains. Clients want out, and meeting their demands means selling assets on a frozen market for next to nothing. Every dollar returned destroys several more. So, Griffin does something for which he will never be forgiven and for which he will never apologize.
It applies restrictions , freezing investors' withdrawals. Clients who see their money lose 55% are now legally prohibited from saving the remainder. For 10 months, restrictions were in the contracts precisely through 1994. Griffin spent decades earning the right to say no, and cold logic worked. Meeting the redemption demands meant a sell-off, a sell-off meant a death spiral, and a death spiral would burn through the capital of the very clients who were demanding an exit.
To save the investors' money, he imprisoned them. Executives, including Griffin, invested $500 million of their own money in frozen funds. Signal, we are locked in the same cell. Criticism of the industry is loud and persistent. Griffin takes it without batting an eye. Judge by the alternative scenario.
Funds that met redemption requirements at the end of 2008 were liquidated at the bottom and caused irreversible losses to clients. A fifth of all hedge funds died during that period . Citadel customers hated this lock. But this blocking is the only reason they got their money back. Both statements are true.
In November, Griffin appears before Congress along with Soros, Paulson, and Simons. Five titans are called to account for the crisis. Do you solemnly swear that the testimony you give to the committee will be the truth, the whole truth, and nothing but the truth? He talks about the worst crisis since the 1930s, about the 1,400-person firm he built.
What the committee doesn't know is how close the firm has come to the edge, even as he speaks. Today, our nation is facing the worst financial crisis since the 1930s. It is imperative that we as a nation continue to take steps to mitigate the impact of the credit crunch on our economy. The gate holds.
The company survives. The strangest year of Ken Griffin's life is coming, the resurrection and burial of his greatest dream. 2009. The positions that Griffin refused to sell are rapidly recovering. Flagship funds bring 62% of the profit. One of the best one- year recoveries ever recorded. The gates are opening.
The corpse comes to life. But here is the cruel arithmetic of drawdowns. Minus 55%, then plus 62%—you're still in the red. You need 120% of profit to cover 55% of losses. Investors were still in the red by about a quarter in 2 years. The mathematics of losses is asymmetric, and that is the most important lesson in this story.
The humiliation continues in the offices that once belonged to Griffin. He flies his plane to Geneva to raise funds and is questioned about the collapse. Pictet, a large Swiss bank, questions him meticulously and refuses. He compares the world's fascination with its losses to people who can't take their eyes off a car accident.
Life is full of disappointments, obstacles, and trials. And one dream dies quietly. After Lehman's demise, Griffin is trying to fill the void and build Citadel as a full-fledged investment bank. The last part of the Goldman fantasy. Talents don't stay. Customers are not coming. By 2011, this idea was abandoned.
The first big thing Ken Griffin built that just failed. Look what this failure taught him. Investment banking is a business of relationships. Customers hire people, not machines. Griffin's strength has always been systems, not relationships. The bank died because it lacked something it never built. He closed the loan, took the losses, and never looked back.
In rare interviews after the crash, journalists noticed something stranger than the numbers . The man who was once called joyless and callous is now joking. And he stopped uttering the phrase that defined decades of his supremacy. He no longer talks about becoming the Goldman Sachs of the 21st century.
Ambitions have not disappeared. They went underground , into a machine born of resentment that grows silently in the darkness. But first the fortress must be rebuilt. And this time, Griffin designs it so that no human can sink it, including himself. From a state close to death, a new architecture is born .
No more risky investments, no more illiquid bets based on faith. Instead, the " pit" model. Dozens of autonomous trading teams, each with its own portfolio and strict risk limits, overseen by a central brain. Think of it as a fund of mini hedge funds under one roof. Each " pod" seeks its own advantage.
The center sees every position. It can hedge the firm's overall exposure or increase the bet when many divisions agree. Loss-making units are closed within weeks. Winners receive capital instantly. No trader will ever be able to sink the fortress again. Staff turnover, which used to be a matter of character, is becoming a doctrine .
Talent is a position that is reevaluated every day. This is cruel. But it is also the fastest growing format in the industry, as competitors try to copy it. Even the " graveyard" of the crisis gets into the payroll. Ben Bernanke, the Federal Reserve chairman who presided over the crash that nearly killed Citadel, becomes a senior advisor in 2015.
From President Obama's right-hand man to advisor to one of Wall Street's largest hedge funds: former Fed Chairman Ben Bernanke has become an advisor to Citadel Investment Group. Private life is also managed like a portfolio. In 2014, Griffin filed for divorce, choosing the moment when his wife was flying over the Atlantic.
The war over a marriage contract, property, and millions in monthly living expenses is making headlines. And here's a new twist in one of the country's biggest divorces. The ex-wife of billionaire hedge fund owner Ken Griffin is demanding a million dollars a month in alimony. In 2015, the marriage contract stood.
He is redirecting funds to a record-breaking real estate purchase, culminating in a $ 238 million Manhattan penthouse. The fortress has been rebuilt. The car is humming. And on the horizon, invisible to all, a dying video game retailer waits to make Ken Griffin more famous than any profit could ever make.
The US is now the global epicenter of the COVID-19 pandemic, and the number of cases there continues to rise. And now, breaking news from Wall Street: after the coronavirus crisis, stock trading on Wall Street has stopped due to a 7% drop. March 2020. The world is closing in. And in the empty ballroom of the Four Seasons Hotel in Palm Beach, 50 Citadel Securities traders and their families settle in— isolated, in luxury , trading during the apocalypse.
Griffin would call this perhaps the first bubble in America. The redesign is undergoing its first real test. While hedge funds lose 7% during the crash, Wellington's flagship fund ends 2020 with a return of 24.5%. The “pods,” the central ledger, the liquidity discipline—everything works exactly as designed.
And the other engine catches fire. A world in lockdown is discovering day trading. Commission-free apps are exploding, and nearly every one of the millions of these new orders is going through wholesalers, chief among them Citadel Securities. Record revenue—$6.7 billion . Here's what most people have never understood.
" Commission-free" never meant free . Brokers like Robinhood sold their clients' orders to market makers— paying for the flow of orders. The market maker executes your trade from its own inventory and makes money on the spread millions of times a day. You saved $5 in commission. The wholesaler has monetized your order.
This is the car. Follow both engines to their logical conclusion. Take a step back and look at what Griffin accomplished in 2020. The fund profits from volatility. The market maker profits from panicked trading volume, from fear itself. Ordinary people buying and selling during the crisis are now an income item.
Two engines, record output. $28 billion in personal wealth. Ken Griffin is the most powerful man in American finance, and the general public has never heard his name. This will soon change for the worst. January 2021. A dying video game retailer called GameStop has become the most shorted stock in America.
At certain points, over 100% of available shares were sold short . And on a Reddit forum called Wall Street Bets, millions of small traders noticed this. A short seller borrows shares and sells them, betting on a price drop. If it increases, the losses are unlimited. The only salvation is redemption.
When there are more short positions than available supply , buyers can corner them, pushing the price up, and sellers have to buy at any price. Their purchases push her higher—a short squeeze, a machine that feeds on its victims. The leak detonates. GameStop shares soared from less than $20 to $483.
Chief among those caught in the trap was Melvin Capital, led by star trader Gabe Plotkin. Melvin loses 53% of his capital in just one month. These protesters are actively discussing investment ideas on social media that will enrich them while hurting the hedge funds on the other side of the deal. But Reddit users realized that if they bought a bunch of GameStop shares together, they could trigger a sharp rise.
Short sellers would have to buy back shares at a higher price, creating what is known as a "short squeeze." And on January 25th, Ken Griffin does what he always does. Amaranth, So Wood, E* TRADE—when a talented manager is sinking, Citadel buys out his troubled assets. $2 billion for Melvin in exchange for a share of his future revenues.
Three days later, the strategy that had enriched Ken Griffin for 30 years had finally made him odious. January 28, 2021. At the peak of the squeeze, Robinhood and other brokers suddenly restrict buying— not selling, but buying—of GameStop shares. The hype surrounding GameStop shares caused a surge in buying by retail investors , resulting in billions in losses for hedge fund professionals.
The rally is choking. The price is collapsing. And millions of traders connect three facts that lie on the surface . Private investors tried to push up the price, while trading apps tried to limit buying activity, which sparked even more controversy. Citadel just saved the biggest shorter . Citadel Securities pays Robinhood hundreds of millions for order flows— $142 million in one quarter.
And Robinhood just disabled the buy button. The Internet concluded overnight: Griffin ordered the action to be “strangled.” In less than a week, the name Citadel is heard in the White House briefing room. Senator Elizabeth Warren demands answers in a formal manner. Regulatory filings show that Citadel's own fund even had a small short position in GameStop.
Every fact is legal and disclosed. Gathered on the screen by an angry crowd, they form the silhouette of a cartel. Now for the sobering reality: Robinhood's clearinghouse has required billions of dollars in emergency collateral due to explosive volatility. Deposit requirements jumped nearly tenfold in a week, and the undercapitalized broker restricted buying to survive on its own success.
Investigations, lawsuits, the Securities and Exchange Commission's own report—everything pointed to these "technical nuances." No evidence ever contradicted Griffin's words. Citadel even lost a little to Melvin in the overall score. February 18, the strangest hearings in financial history. Griffin is testifying under oath—his face on a video grid alongside Robinhood CEO Plotkin and a YouTube trader nicknamed Roaring Kitty, who simply tells Congress that he likes the stock.
13 years ago, Griffin sat next to Soros and Simons. Now he reports to the man in the headband. Griffin refuses to play the role of the repentant. Paying for order flow, he tells Congress, has reduced trading costs for retail investors to historic lows —a claim largely shared by regulators but one that the crowd finds unforgivable.
As for payment for order flow, we simply play by the established rules. The payment for order flow was expressly approved by the Securities and Exchange Commission. This is common practice in the industry. If they decide to change the traffic rules, say, drive on the left instead of the right, we're perfectly fine with that.
I truly believe that payment for order flow has become an important source of innovation in the industry. He becomes a Bond villain on the internet. He is ridiculed in millions of memes and gets richer every day because the volatility created by the crowd runs right through his machines. 2022 is a bloodbath for everyone else.
Stocks and bonds fall together. The S&P index falls by almost 20%. The correlation nightmare of 1994 and 2008 is back in action. These are exactly the conditions for which the updated machine was created. Every grain sown for 30 years yields a harvest at the same time. The commodities division, born of Enron meteorologists and hardened on Amaranth trading, is bringing in billions as the war shakes up energy markets.
The fixed income division is benefiting from the fastest rate hike cycle in four decades. Equity units make money on both sides of a falling market. Wellington's flagship fund is showing a 38% return. Citadel funds generate $16 billion in net income— the largest annual profit ever achieved by a hedge fund, breaking John Paulson’s legendary record set in 2007 .
Ken Griffin's hedge fund, Citadel, earned $16 billion in net profit after fees in 2022. This is the largest annual profit ever made by a hedge fund manager. This new report shows Citadel taking the top spot on the list of the top 20 hedge funds, surpassing John Paulson's $15 billion annual profit in 2007.
Understand why this year. Multi-strategy platforms do not need market growth. They need dispersion and volatility, where prices move sharply in both directions. 2022 punished everyone who held assets and rewarded those who traded them. Since 2008, Citadel has spent 14 years transforming itself from an asset owner into a pure trading machine.
This was the exam she was preparing for. In January 2023, LCH Investments officially confirms this. Citadel overtakes Bridgewater as the most profitable hedge fund in the industry's history. The goal recorded in 2017 was achieved in 5 years. Today, the amount exceeds $90 billion. 19.2% per annum for 35 years, despite LTCM, the dot-com crash, 2008 and the pandemic.
At Citadel's headquarters in Miami, this rating is literally engraved near the elevators. The most profitable of all time. And these elevators are no longer in Chicago. June 2022. Griffin is ending a thirty-year marriage to Chicago, the city that made him, and is moving Citadel and Citadel Securities to Miami.
He is not joining the city. He starts buying it. A hundred million complex. Star Island , assembled plot by plot. A tower designed to dominate the skyline. 50 soccer fields donated throughout the county. Finance follows him south by the tens of thousands. Miami-Dade's population is growing by 11% in 3 years.
House prices double, topping 675,000. The ordinary town foots the bill for its coronation, while the new king sacrifices hospital wings to cushion the blow he himself inflicts. Trophies become national. In late 2021, he beats out 17,000 crypto strangers, a crowdfunding internet collective, to win the first edition of the U.S.
Constitution at auction. 43 million dollars. One bet over the phone. The Internet mob against Ken Griffin, once again. Griffin wins. Then he gives it to the museum for free to the public. About half an hour ago last night, the people who raised $47 million in an attempt to buy a version of the U.S. Constitution.
Today it became known that the winner of the auction was Chicago billionaire hedge fund manager Ken Griffin. Griffin says he plans to lease it to an art museum in Arkansas. His politics work like his portfolio: positions, not loyalties. A quarter of a billion to Republicans over a decade, but not a single dollar to Donald Trump, whose tariffs he has publicly criticized as crony capitalism and the agony of the nation.
He met with Trump about donations, but kept his checkbook closed; For a person who buys everything, this refusal is a statement. And I, I think everything that we talked about that day, unfortunately, remains true today, which is that the administration's attempts to use tariffs are costly to the U.S.
economy and are costly to the American consumer, who will undoubtedly face higher prices in their daily lives because of these administration actions. The numbers of the empire have lost their usual meaning. Citadel Securities, $12.2 billion in trading revenue in 2025. The entire business—39.6 billion, more than Goldman Sachs, the firm he once aspired to become.
Second only to JP Morgan among all the financial institutions on Earth. Personal fortune is approximately $51 billion . 57 years old. Decades of opportunity lie ahead . No successor that anyone believes in. And one question that the record cannot answer. Consider the bill. He built the most profitable investment firm ever created from a student room and his grandmother's trust .
He modernized the mechanics of the markets, lowering trading costs for the very small investors who hate him. He survived a crash that wiped out a fifth of his industry and paid off every creditor in full. And he perfected a mechanism that forever, penny by penny, collects a stream of orders from amateurs.
He monetized disasters—Enron, Amaranth, Solwood, Melvin—and calls it liquidity. He locked his clients in a burning building because he knew it would save them, and he never once apologized for that lock. Both accounts are true at the same time. That's why it's difficult to classify. Every panic needs a buyer of last resort.
And for 35 years, when no one else dared to catch a falling knife, Griffin caught it— for a price. The market really needs what he does. But that doesn't mean he has to like what he has become by doing it. The firm experienced a loss of 55% of its capital. She never rehearsed how to lose him herself.
For a man whose philosophy is based on eliminating critical points of failure, he spent 35 years making himself the last such point. The boy in Boca Raton was close to wealth and could not come to terms with that neighborhood. The man in Miami owns the skyline, the scoreboard, the Constitution itself.
Genius, predator, savior, villain. For 35 years, the answer depended on which side of his deals you were on. Ken Griffin, as always, knew the market better than anyone, he will tell us. Because somewhere tonight the car is still awake. The book is evaluated in the dark. The phone is about to ring at 3:30 in the morning .
If 35 years prove anything, it's this. On Wall Street, something is always on the verge of death. And when that happens, he will be standing by the grave, buying.
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