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Market-making giant Citadel Securities has urged the U.S. Securities and Exchange Commission to regulate decentralized finance platforms under the same rules that govern traditional exchanges and broker-dealers, igniting a fierce backlash from DeFi leaders who warn the move could kill permissionless innovation.
Uniswab founder Hayden Adams fired back this week, accusing Citadel CEO Ken Griffin of mounting a “coordinated attack” on open-source finance to protect his firm’s dominance over U.S. retail trading flows.
Citadel SEC Bid Faces Industry Blowback Over “TradFi Overreach”
The battle escalated when Adams took to X (formerly Twitter), blasting Citadel founder Ken Griffin for what he called a coordinated attack on decentralized finance under the banner of fairness.
According to Adams, Citadel has been lobbying behind closed doors on this for years, now they’re openly coming for DeFi by asking the SEC to treat software developers like Wall Street intermediaries.
Adams insists the Citadel SEC bid misrepresents how decentralized protocols work, arguing that the filing frames open-source developers as middlemen despite them having no operational control once code is deployed.
At the heart of the dispute is Citadel Securities’ assertion that DeFi systems “bring together buyers and sellers in a coordinated manner,” meaning they should fall under the same regulations as exchanges and broker-dealers.
The Citadel SEC bid argues that DeFi’s use of blockchain code does not exempt participants—including developers, validators, liquidity providers, and interface operators—from oversight.
Citadel wrote: “Activities implemented via distributed ledger technologies should not receive differential regulatory treatment simply because they rely on code.”
Adams fired back almost immediately. “The nerve of Citadel to claim DeFi lacks fair access when they themselves are the king of opaque, privileged market making,” he posted.
He accused Griffin’s empire of trying to protect its dominance: Of course the biggest TradFi market maker wants to crush open-source, peer-to-peer tech that lowers the barrier to liquidity creation.
DeFi advocates argue that Citadel’s appeal to “fair access” is ironic given Citadel’s history of dominating order flow and internalization in equities markets.
Citadel controls more than a third of U.S. retail equity volume, notes Eduardo Portillo, a digital assets researcher at Keyrock. For them to suddenly champion market fairness sets off industry alarm bells.
Supporters of the Citadel SEC bid, however, say traditional safeguards could reduce retail harm. Regulation shouldn’t depend on whether a system is centralized or decentralized, says former CFTC Chair Timothy Massad. What matters is the function and the risk to investors.
Still, critics argue that applying TradFi rules to permissionless protocols is both impractical and potentially catastrophic for innovation.
The controversy comes at a pivotal moment. The SEC has spent months evaluating how to classify tokenized securities, automated protocols, and digital liquidity venues.
The Citadel SEC bid could influence how regulators define “exchange activity” in blockchain environments.
A stricter reading could force developers, validators, and liquidity providers into compliance roles they cannot realistically perform.
Code isn’t a company, and developers aren’t brokers, explains blockchain legal analyst Alexandra Roseman. If the SEC adopts Citadel’s framework, DeFi in the U.S. could be regulated out of existence.
The industry now waits to see how the SEC interprets the arguments presented. The Citadel SEC bid has undeniably pushed DeFi’s regulatory fate to center stage.
The Citadel SEC bid has unleashed a fiery philosophical and political battle over the future of open finance.
With Hayden Adams leading the charge against what he views as an existential threat, and Citadel doubling down on its call for equal regulatory treatment, the dispute is poised to shape the regulatory landscape for years.
As policymakers sift through filings and public reactions, one thing is clear: the fight over DeFi’s identity—software or financial intermediary—is no longer theoretical. And the Citadel SEC bid has become the flashpoint.
