Is Citadel our generation’s Enron?

Anish Kaushal
6 min readApr 27, 2021


Source: Business Insider

Disclosure: All opinions presented here are purely my own and do not represent my firm or anyone associated with it. This is not a recommendation. Do your own homework and due diligence before investing in anything.

First posted on my personal website (here).

I’m reading Nicolas Nassim Taleb’s book ‘Anti-Fragile’ right now and the first ethical principle he cites is:

‘First ethical rule: If you see fraud and do not say fraud, you are a fraud.’

I am not a fraud.

Citadel is our generation’s Enron.

Read this diligence article today on Reddit and wow, is the financial world in for a wake-up call.

I would highly recommend you spend the time to read this as well as the other articles this amazing Redditor has put together. He’s showing that Citadel’s accounting books are completely fraudulent.

Essentially Citadel, the parent company, owns numerous subsidiary companies that buy and sell US treasuries to each other. The same company is trading with itself.

When they do the accounting for each subsidiary company, they don’t disclose all the information. Neither the parent company nor the affiliate company is accounting for losses because the accounting is showing they’re covering each other’s books. That’s fraud. They’ve been hiding the transactions FOR YEARS!

FINRA has slapped nominal fines on them but that obviously has not stopped them. It’s worth paying millions of dollars for settlements when you’re making billions of dollars on the backend.

All of this will likely come out once AMC and Gamestop squeeze but there’s going to be a lot of shady stuff going on behind the scenes.

I’m more convinced than ever that Robinhood was told by Citadel, their number 1 revenue generator and the source of keeping their business alive, to stop allowing buying when Gamestop’s stock squeezed in January. They will cite the collateral requirement, which is partially true, but you cannot convince me that there are no phone calls, conversations or documents between people connected to Citadel and people connected to Robinhood about that decision. I refuse to believe it. The US government needs to subpoena all the documents and communications because there’s something going on.

When the next squeeze happens, it could get violent. If Robinhood pauses buying again, you know exactly who’s guilty.

Citadel has no clothes.

So what did I do after learning about Citadel today? I just finished the Enron documentary made in 2005 titled Enron: The Smartest Guys in the Room, and I see so many similarities. Watch it (free link to stream here).

Quick overview of the Enron scandal -

· Enron’s leadership fooled regulators with fake holdings and off-the-books accounting practices

· Enron used special purpose vehicles (SPVs), or special purpose entities (SPEs), to hide its mountain of debt and toxic assets from investors and creditors.

· The price of Enron’s share went from 90.75 at the peak to 0.26 at bankruptcy

· The company paid its creditors more than 21.7 billion from 2004 to 2011

(For a more extensive overview, check out this article).

It starts with the people at the top.

Who led Enron? Two guys named Kenneth Lay and Jeffrey Skilling.

They were the ultimate con artists. Made Wall Street and Investors believe all their profits were legit. They fooled the whole world for decades. Meanwhile, they were making up the entire accounting as they were going along. Mark to market accounting — here.

Kenneth Lay and Enron were also the biggest contributors to Bush’s campaign for president. As mentioned in the movie, they were best friends. Enron was in tight with the president and politicians who controlled all the energy markets.

How is this similar to today’s situation?

Read this article that goes into Ken Griffin’s background, the man at the top of Citadel. Ken Griffin is the number 2 donor to the Republican Party and spent 66 million dollars a year ago in donations. He spent 54 million dollars in a year to get a tax bill killed in Illinois. He spends hundreds of millions of dollars in political donations to Republicans.

See any similarities here?

How about, as outlined in the Reddit post above, Citadel created multiple subsidiaries to trade within itself and report inaccurate transactions? Enron did a similar thing when they created SPEs (special purpose entities) to hide toxic assets from investors and creditors.

Citadel has grown into becoming one of the largest market makers on Wall Street. Goldman executives have been telling insiders Citadel is the biggest threat to its trading business. It’s responsible for order flow for 9 brokers. NINE BROKERS ON WALL STREET USE CITADEL TO TRANSACT THEIR CLIENTS ORDERS. Not just Robinhood, but also E-Trade, TD Ameritrade, Charles Schwab, WeBull, Ally Invest Securities, First Trade and TradeStation. Key thing is these brokers don’t only use Citadel, but still. They’re responsible for a lot of action in the market.

One of the largest market makers on Wall Street.

Too big to fail right?

I don’t think so.

But we have to wait and see.

It’s possible Robinhood will stop people from buying in the meme stocks like AMC and GME once they squeeze to cover Citadel.

Citadel, Melvin and the other hedge funds are over-leveraged. They’re going to get margin called and are going to have to start liquidating positions.

The market is going to collapse.

What happens after that?

Will congress hold hearings with Citadel and investigate what they’ve been doing behind the scenes in the treasury market? They have to.

There will be lots of questions. Did the banks know? How much did the banks know?

I bet the answer is yes. How do you think Bill Hwang and Archepegos happened? Banks were too over-leveraged and did hold enough collateral.

Did they know how much leverage the other banks were giving to Bill? Maybe not but they were happy to give this guy tons of free money, with little interest. They were making so much of it in fees.

The question now is how much over-leveraged crap are the banks holding?

My guess is exactly the same as it was in 2008. A lot of it.

You know the other thing that’s crazy about this whole situation?

CLOs. Collateralized loan obligations.

Do you know what brought down the US market in 2007/2008? CDOs. Collateralized debt obligations.

As Steve Carrell beautifully describes in the Big Short, it’s like crap being piled on top of crap constantly traded between the banks.

What happens when people can’t pay their debt? They start defaulting.

Companies are about to go through that. There are tons of zombie companies out there right now in America. Covid hammered them. Because the US government is buying corporate debt, everything looks great.

But they can’t keep these companies alive forever. Evolve or die.

I came to this conclusion because of something I read in the Atlantic back in July 2020 titled the Looming Bank Collapse. It is well worth the read, especially in today’s environment, because there could be multiple collapses on top of itself.

We might be in more crap than I ever realized.


Biggest transfer of wealth from institutions to retail the stock market may ever see.

Citadel is exposed as a fraudulent company. They need to be held accountable for their crimes. However, if you look at Enron’s scandal, this likely plays out over multiple years and it’s possible no one even goes to prison.

The banks are over-leveraged like crazy. Once margin calls start happening, it’s over.

CLOs are being traded in the background and the banks are continuing to prop up zombie companies.

This could get ugly, potentially uglier than we’ve ever seen before in history.

All because a bunch of people on the Internet learned about the stock market.

What a crazy world we live in.

Keep Going, You’re Doing Great


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Anish Kaushal

Doctor | Venture Capitalist | Amateur Sports Analyst | Lover of Oreo Mcflurries