Portofino says crypto dispute with Citadel Securities should stay in England

Cryptocurrency firm Portofino Technologies wants a New York district court to dismiss a lawsuit lodged by Citadel Securities over alleged trade secrets.

A lawyer representing Portofino said the case should be dismissed, in part because it should be conducted across the pond back in England, not in New York, according to a filing on Tuesday.

"Both the real Plaintiffs in interest and Portofino are European entities—either English or Swiss," they wrote. 

Portofino co-founders Leonard Lancia and Alex Casimo worked for Citadel Europe, so the allegations took place in Europe, according to the filing. 

Both Lancia and Casimo were accused in May of allegedly accessing Citadel Securities' proprietary information during the development of their firm. Citadel Securities wants to put them on trial to determine monetary damages and potential restitution. 

"Faced with a lack of facts supporting its trade secret claims, Plaintiffs say that Lancia and Casimo cannot engage in any HFT market-making, no matter what instrument they trade, without necessarily stealing their trade secrets," Portofino's lawyer said. 

That is meant to intimidate other Citadel Securities employees who are looking to leave, they added. 

"No matter how much Plaintiffs may wish it otherwise, they do not own their employees and their employees’ skills," the lawyer wrote in the filing. 

Portofino was founded last year and built high-frequency trading technology for digital assets. It claims to have already traded billions of dollars across both centralized and decentralized cryptocurrency exchanges and over the counter.

Arbitration pending

Citadel Europe filed an arbitration against Lancia and Casimo in London in June 2022, according to Tuesday’s filing.

"Eleven months later, apparently dissatisfied with the London arbitration proceedings, Citadel Europe and its American affiliates filed this lawsuit," the lawyer said. "It is full of baseless insinuations, calculated distortions, and outright falsehoods."

If the New York court decides not to dismiss the case, they argue it should "stay it pending the outcome of the London arbitration." That arbitration is scheduled for May 2024, according to the filing. 

Lawyers for Citadel Securities say Portofino's founders touted their employees' experience at Citadel Securities and said it planned to grow in New York, in an amended complaint filed in July. 

"What Portofino failed to disclose, however, was that in order to build and launch the company, its founders—Leonard Lancia and Alex Casimo—had engaged in a brazen scheme to steal Citadel Securities’ trade secrets, lie to their Citadel Securities colleagues, and raid the ranks of Citadel Securities’ employees," those lawyers said. 

Lancia and Casimo "secretly designed" and launched a crypto market-making firm while working for Citadel Securities, according to a spokesperson for Citadel Securities.

"We have 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," the spokesperson told The Block.