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Susquehanna International Group just lost a key battle in its fight to recover tens of millions of dollars it says it lost to insider trading. A federal judge in the Southern District of New York declined to freeze the accounts of unidentified defendants who allegedly used advance knowledge of a Chinese government crackdown to score a 900%-plus return on short-dated put options.
The ruling, issued on August 26 by Judge Arun Subramanian, effectively means that the proceeds from the alleged scheme could start moving again. Susquehanna claims roughly $70 million in losses as the counterparty to those trades.
The trade that raised every red flag
On May 22, the Chinese government announced a crackdown on unlicensed brokerages, a move that sent shares of US-listed Chinese fintech platforms FUTU Holdings and UP Fintech (ticker: TIGR) tumbling.
In the days leading up to that announcement, unknown traders acquired more than 200,000 short-dated put options on those two stocks. These traders turned approximately $12 million in options purchases into profits exceeding $100 million.
Susquehanna Securities and Susquehanna Investment Group filed their lawsuit on June 29 in the Southern District of New York, alleging that the traders had access to non-public information about the impending Chinese regulatory action. The same day, the court granted a temporary restraining order freezing proceeds held at brokerage firms including TradeUP Securities and Interactive Brokers.
Citadel joins the fight, then the freeze melts
Citadel Securities intervened in the case, claiming its own losses of approximately $28 million from serving as a counterparty to the same options positions.
The TRO was extended multiple times through mid-August, and the court reached partial resolution agreements with some identified defendants along the way. Some restrictions were lifted as individual account holders came forward and negotiated terms.
But the core problem remained: most of the defendants were listed as John Does. Judge Subramanian ruled that it was inappropriate to convert the temporary restraining order into a more durable preliminary injunction when the targets were identified solely by pseudonyms.
The case itself isn’t dismissed. Susquehanna can still pursue its claims. But without the freeze in place, there’s a real risk that the alleged profits migrate to jurisdictions or accounts where they become much harder to recover.
What this means for market structure
Options market makers like Susquehanna and Citadel Securities function as the plumbing of US equity markets, providing liquidity by taking the other side of trades. The combined claimed losses of roughly $98 million between Susquehanna and Citadel Securities represent a significant hit, even for firms of their size.
The ruling highlights a practical challenge in modern securities enforcement: the difficulty of identifying traders who operate through layers of brokerage accounts. The fact that Susquehanna had to sue John Doe defendants and rely on brokerage-level account freezes rather than naming individuals speaks to how opaque certain trading channels remain.
Susquehanna’s legal team will need to identify the traders behind the John Doe designations through discovery, subpoenas to brokerages, and potentially international cooperation if the defendants are based overseas.
Judge Subramanian’s ruling doesn’t say the insider trading didn’t happen. It says you can’t indefinitely freeze someone’s money when you don’t even know their name yet.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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