In the latest Ethereum crypto news, Citron Research, a leading U.S. short-seller, shared its views on the FTX story on Twitter. Citron stated, “We continue to be short ETHER as we believe this $130 bil token has as many common sense flaws as does the whole SBF story.”
The Citron Story
Founded in 2001 by Andrew Left, Citron Research is a well-known short-selling firm known as the “longest-lived independent research firm.” By the end of January 2021, Citron had issued more than 150 short reports, including more than 20 Chinese stocks, and caused 16 stocks to drop more than 80% and 7 to be delisted at one point. In terms of short selling strategy, Citron mainly uses field research and financial analysis to find out the “discrepancy” between the financial data and actual operation of listed companies, such as fictitious sales revenue or profit performance, to issue short selling reports against listed companies’ financial falsification. In addition, they also specialize in investigating whether there is misconduct of listed company executives and whether the listed company’s capital operation is compliant and legal, which makes their short-selling topics become more abundant. A senior Wall Street long-short strategy hedge fund manager claimed that Citron’s short-selling reports rarely failed in the early years. Many listed companies hate Citron, but at the same time, they have to praise them for catching the long-hidden “financial loopholes” of these listed companies.
Citron’s famous short-selling operations include targeting Valeant Pharmaceuticals International Inc. and electric car maker Azera, where short-selling reports led to a collapse in the share prices of these listed companies.
Citron VS. Gamestop
After Citron issued a short-selling report last January questioning GameStop’s operations and saying it was only worth $20, WallStreetBets saw a large number of retail investors turn to short-buying GameStop to vent their frustration that short-sellers were working with institutional investors to short the stock and rob retail investors of their wealth. After short-selling GameStop failed, Citron intended to file a complaint with the SEC. Retail investors, however, issued an open letter accusing “the hedge fund elite of manipulating the market.
Eventually, Citron Research founder Andrew Left had to call WallStreetBets founder Jaime Rogozinski and ask him for help – and as a result, he was attacked online by many angry investors, some of whom even threatened his children. However, this did not work, as Jaime Rogozinski could also not quell the anger of the many retail investors on the forum. After several unsuccessful bailouts, Andrew Left had to “surrender” altogether – announcing that Citron would no longer sell short.
Nevertheless, less than two years later, Citron returned and claimed to be shorting ETH after the FTX turmoil. After the previous head-to-head confrontation with the U.S. retail investors, several Twitter users asked if this tweet would become another indicator of GameStop all over again.