Ken Griffin vs. Reddit Traders: What Happened During the GameStop Saga?

The GameStop saga of January 2021 pitted armies of retail investors against big Wall Street players. Fueled by posts on the Reddit forum WallStreetBets, a swarm of small traders massively bid up GameStop’s stock (ticker GME). They were targeting hedge funds that had heavily shorted the company’s shares. The stock briefly soared from under $20 to a high of $347 in late January, a gain of roughly 1,625% for the month.

Hedge funds, such as Melvin Capital, which had bet on GameStop’s decline, suffered enormous losses. It lost about 53% in January and needed emergency cash infusions. In this brawl, Ken Griffin became a lightning rod. Retail traders viewed his firms as part of the establishment they were “sticking it” to.

However, he insisted Citadel had no part in any manipulation. This article provides a detailed timeline of key events, explains Griffin’s role, and covers the legal and market aftermath of the frenzy.

Background: The GameStop Short Squeeze

GameStop is a brick-and-mortar video-game retailer whose business has been struggling. By late 2020, many Wall Street hedge funds had short positions on GameStop. They borrowed shares and sold them, betting the stock price would fall. On the retail side, a passionate community of individual traders on Reddit’s WallStreetBets forum, including investor Keith Gill, began touting GameStop as undervalued.

His public posts and videos in mid-2020 highlighted the stock’s potential, sparking wider interest. As more small investors piled in, a classic short squeeze unfolded. The buying pressure drove GameStop’s share price sharply upward, forcing short-sellers to buy shares to cover losses, which in turn pushed the price even higher.

The frenzy took off in January 2021. GameStop’s price, as a result, jumped dramatically. For example, on Jan. 27, 2021, it closed at $347.51. As such, trading volumes exploded. The U.S. stock and options markets set new records. Over 24.5 billion shares and 57.1 million contracts traded on Jan. 27 alone.

Reuters later noted that retail traders using Reddit had driven the stock up by more than 1,000% in two weeks. Melvin Capital and other short sellers faced crushing losses, precipitating desperate fundraising efforts. Crucially, Citadel’s hedge fund, Ken Griffin’s firm, and Steve Cohen’s Point72 stepped in with a combined $2.75 billion to bail out Melvin on Jan. 25, 2021. Citadel’s investment stabilized Melvin temporarily. That’s because Citadel and Griffin personally contributed roughly $2 billion of that amount.

Ken Griffin and Citadel’s Role

Griffin, a billionaire hedge fund manager, controls two key entities, Citadel LLC and Citadel Securities. During the GameStop frenzy, these businesses had distinct roles:

Citadel (hedge fund)

In the chaos of late January 2021, his hedge fund arm heavily invested in Melvin Capital. As noted above, together with Point72, they injected $2.75 billion into Melvin on Jan. 25. According to Citadel, they did this to take advantage of low prices (“buy low”). Griffin described the investment as an opportunity rather than a rescue. Citadel’s funds lost less than 1% on the Melvin position.

Citadel Securities (market maker)

This trading firm executes retail orders on stock exchanges. Many popular brokers like Robinhood route their customer trades to Citadel Securities in exchange for payment-for-order-flow. During the squeeze, Citadel Securities was a major provider of liquidity. Griffin noted it was “the only major market maker to provide continuous liquidity every minute of every trading day” during the volatility.

Its Securities executed roughly 47% of all U.S.-listed retail stock trades. Also, he later testified that Citadel executed 7.4 billion shares for retail investors on January 27 alone, more than the entire U.S. average daily volume in 2019.

As a result, Citadel and its leadership came under scrutiny for these dual roles. Some Reddit traders portrayed Griffin as a villain. As a Wall Street titan working with Robinhood to shut down the squeeze. But he and his firms denied any wrongdoing. At congressional hearings and in public statements, he repeatedly said he had no role in pressuring Robinhood or any broker to restrict trading.

For example, during the Feb. 2021 House hearing, he stated. “I want to be perfectly clear: we had no role in Robinhood’s decision to limit trading in GameStop or any other of the ‘meme’ stocks.”

Similarly, Citadel Securities issued a public statement in September 2021. It was explicitly denying any involvement in the trading halts. It said it “never requested, intimated, agreed or otherwise sought to limit or restrict” trading in those securities.

In private comments and on social media, Griffin insisted that neither he nor Robinhood CEO Vlad Tenev had ever even met or contacted each other during the crisis. Robinhood likewise emphasized to Congress that it acted to meet clearinghouse demands, not to protect hedge funds.

The Retail Army on Reddit

On the other side of the conflict was a large, loosely organized army of retail investors, many of whom congregated on Reddit’s WallStreetBets. These traders often expressed a populist antagonism toward hedge funds and big banks, delighting in forcing losses on short-sellers. GameStop became a rallying point, with slogans like “the more shares Ken Griffin sells, the more Roaring Kitty buys,” and memes depicting him as an antagonist.

The main catalyst was Keith Gill’s campaign. Starting in mid-2020, Gill posted videos and charts explaining why he believed GameStop was undervalued and heavily shorted. His followers, and others on WallStreetBets, began buying shares and call options en masse.

The purchasing snowballed. GameStop’s price climbed in late 2020, rising about 57% on January 13 alone, and after hitting a low in early December, the stock rallied strongly by mid-January. By Jan. 27, it had surged roughly 1,625% for the month, amassing billions in market value.

Many retail investors touted themselves as David vs. Goliath taking on Wall Street. They exchanged posts like “🦍 To the moon!” and celebrated every new high. When Robinhood halted buying on Jan. 28, WallStreetBets exploded in anger, with hashtags like #KenGriffinLied trending on Twitter.

Some retail commentators raised conspiracy theories that Citadel or other insiders had secretly influenced the trading freeze. In truth, as regulators later confirmed, the restrictions were due to extreme capital requirements from the clearinghouse. It was not because of any agreement among brokers or hedge funds. Nonetheless, for many retail traders, the idea of Griffin profiting from retail pain became a rallying grievance.

The frenzy also bled into other heavily shorted stocks, e.g., AMC, BB, and NOK. It was turning them into so-called meme stocks. However, GameStop was the epicenter and remains the story’s poster child. By early February, the euphoria cooled. Stock prices retreated, many late-joining retail investors faced losses, and attention shifted to legal and regulatory fallout.

Clash and Controversy: Collusion Claims and Hearings

As GameStop’s volatility grew in late January 2021, politicians and the media began asking whether Wall Street had played fair. U.S. lawmakers launched investigations into payment-for-order-flow, trading app gamification, and the events of that week. The centerpiece was the Feb. 18, 2021, congressional hearing before the House Financial Services Committee. Simultaneously, a Senate hearing was held.

At that hearing, several key figures testified:

Vlad Tenev (Robinhood CEO)

Tenev explained that on January 28, Robinhood stopped buy orders for several stocks because the Depository Trust & Clearing Corp. had demanded an unusually large increase in clearing deposits, in the billions. He said this was not to protect hedge funds, calling collusion claims absolutely false.

Ken Griffin (Citadel CEO)

Griffin reiterated that Citadel had not contacted Robinhood or any broker about trading restrictions. He discussed how Citadel Securities had provided continuous liquidity at the peak of trading and how Citadel’s hedge fund had invested in Melvin. Under questioning, he was asked if Citadel’s market-making business gives special prices to big clients. He assured lawmakers that Citadel Securities had provided price improvement of about $3 billion to investors in 2020, and defended the practice of payment-for-order-flow as ultimately lowering costs.

Gabe Plotkin (Melvin Capital)

Plotkin testified that Melvin did not ask for a bailout. It’s rather, Citadel and others that offered money. He said Melvin closed its positions before trading was halted, and insisted that Melvin played absolutely no role in broker decisions to restrict trading.

Keith Gill (Roaring Kitty)

Gill appeared via video and largely presented himself as a hobbyist investor. He said he acted independently, using only public information, and did not orchestrate any campaign. However, he was later sued by some investors in Massachusetts for allegedly hyping the stock, but the court ultimately rejected those charges.

NOTE: Both Robinhood’s and Citadel’s CEOs emphasized that they never spoke during the crisis. Robinhood’s lawyer later quipped that Robinhood “owns what happened” when asked to assign blame. Media accounts of the hearing noted the tension. Some legislators angrily demanded answers, while Rep. Brad Sherman (D-CA) scoffed at Griffin’s answers. But overall, none of the major players admitted wrongdoing, and both Griffin and Tenev denied any improper collusion.

Legal Fallout: Lawsuits and Settlements

• Wave of Class-Action Lawsuits

In the weeks following the squeeze, class-action lawsuits were filed by disgruntled investors who lost money in the plunge. Many suits targeted Robinhood, Citadel, and other brokerages, alleging they had conspired to block trades and manipulate prices. For example, a consolidated complaint filed in July 2021 accused Robinhood and Citadel of an “antitrust conspiracy” to spare Citadel losses on short bets. These cases sought billions in damages on behalf of classes of retail traders.

• Judicial Scrutiny and Key Dismissals

However, U.S. courts have been skeptical of these claims. In November 2021, a federal judge, Cecilia Altonaga in Miami, dismissed a key lawsuit. The judge found no direct evidence of an illegal conspiracy, despite the plaintiffs pointing to some email communications between Robinhood and Citadel executives.

The court noted that vague emails in an ongoing business relationship were insufficient to prove collusion. Robinhood hailed the decision as confirming that the collusion theory has no basis in fact, and Citadel said it was pleased with the outcome. The plaintiffs were given leave to amend their complaint, but similar suits have largely failed to overcome court scrutiny.

• Robinhood’s Settlement Negotiations

Meanwhile, Robinhood itself faced litigation over the trading freeze. In 2024, Robinhood indicated it would settle a Miami federal lawsuit by users who alleged the firm “unlawfully manipulated market prices” by selectively disabling buys. Details of that settlement were not public, but media reports said a deal was imminent in mid-2024. Those cases centered on securities laws, not on Griffin personally.

• Griffin and Citadel Named in Individual Lawsuits

Griffin and Citadel were named in a few lawsuits, too. For example, a pro se plaintiff in Florida filed a suit in 2021 against Ken Griffin, Citadel, the SEC, and others, alleging a broad market manipulation scheme. The 11th Circuit in 2024 remanded that case on procedural grounds and did not rule on the merits. In practice, no court has found merit in claims that Griffin or Citadel orchestrated the GameStop frenzy or trading halts.

Regulatory Reviews and Official Findings

Regulatory reviews also largely cleared Citadel. The SEC’s October 2021 report on the episode debunked many conspiracy theories. The SEC staff found that “purchase orders by those covering shorts were a small fraction of overall buy volume”, meaning retail momentum, not shorts covering, sustained the price rise.

The Commission noted the clearinghouse margin calls forced Robinhood’s actions, confirming what the companies said. The SEC concluded that hedge funds, other than Melvin, were “not significantly affected” by the meme stock trades. In short, regulators did not find evidence of fraud or collusion by Citadel or others. However, they did say the episode highlighted flaws in market structure that warranted reform.

Aftermath and Market Impact

• GameStop aftermath

The GameStop saga left a lasting imprint on markets and policy debates. In the short run, GameStop and other meme stocks remained volatile. Its share price has since fallen from its January highs, but it has not returned to pre-2021 levels and still trades well above the sub-$5 it was before the squeeze.

Retail interest in these stocks waned, and the WallStreetBets community became a media fixture. GameStop’s board also changed. Investor Ryan Cohen (of Chewy) took a leading role in transforming the business, though this was separate from the short-squeeze saga.

• Regulatory and Structural Reforms

More importantly, regulators and exchanges moved to strengthen market resiliency. The SEC and clearinghouse took steps to shorten settlement cycles and ensure brokers hold more capital. For example, by June 2024, the U.S. equity markets shifted to T+1 settlement for all stocks, reducing the risk that a two-day lag could force massive margin calls. The SEC also finalized new rules requiring large funds to publicly disclose more information, including their short positions, not just as a business trend, but aiming to increase transparency.

• Scrutiny of Payment-for-Order-Flow and Gamification

Payment-for-order-flow (PFOF) and gamification of trading came under greater scrutiny. Citadel Securities’ role in the controversy spotlighted PFOF. In late 2022, the SEC proposed sweeping changes to payment-for-order-flow arrangements, seeking to direct more retail orders to public exchanges. Although those rules are still being finalized, the post–GameStop environment has made platforms like Robinhood and their ties to market makers a central regulatory issue.

In fact, Congress held additional hearings on payment-for-order-flow and trading app practices in early 2021, after the GameStop hearing. By mid-2024, SEC chair Gary Gensler and others have signaled moves to tighten PFOF rules and curb trading features that may encourage excessive trading.

• Citadel’s Role and Reputation

As for Griffin and Citadel, the GameStop saga has become a defining chapter. In popular narratives, Citadel is cast as a villain. In reality, its Securities earned large profits providing liquidity during January 2021. Its main hedge funds weathered the storm relatively well, since their only exposure was the capital given to Melvin, which they largely recovered.

Griffin himself testified that his firms helped sustain market functioning. In fact, Citadel Securities disputes that it profited in any unusual way. The firm claimed to have given investors $3 billion in price improvement in 2020, reinforcing that it sees itself as serving retail orders rather than aiding hedge funds.

Final Remarks

In a nutshell, the GameStop episode was a wild clash between internet-driven retail investors and Wall Street. In the process, Ken Griffin and his firms were thrust into the spotlight. However, by official accounts, they did not manipulate the markets on behalf of other hedge funds. The true victors of the saga remain uncertain. Some retail investors made life-changing gains, especially early buyers, while many others lost.

Hedge funds like Melvin took heavy hits, but the broader market ultimately absorbed the volatility without systemic collapse. The long-term impact has been on market structure. Regulators are bolstering transparency, shortening settlement, and examining how trading apps interact with high-speed market makers. Lastly, the GameStop vs. Citadel story will be remembered not only for its blockbuster drama but for the regulatory changes and debates it set in motion.