Susquehanna insider trading case called into doubt by US judge
Judge cites insufficient evidence to justify extending a freeze on some accounts while case proceeds
Published Wed, Sep 16, 2026 · 12:30 PM
A FEDERAL judge dealt a setback to Susquehanna International Group’s lawsuit claiming it lost tens of millions of dollars to insider trading on a Chinese regulatory crackdown, denying a request to keep the alleged traders’ accounts frozen.
US District Judge Arun Subramanian said on Tuesday (Sep 15) that Susquehanna had not put forth sufficient evidence to justify extending a freeze on the accounts while the case proceeds, pointing out that firm had not identified an alleged “tipper” of the inside information.
He also said there appeared to be other possible explanations for the trades and suggested that Susquehanna, as a sophisticated market maker, might have been able to hedge against the trades.
Susquehanna sued 100 John Doe defendants in Manhattan federal court in late June, seeking to recover more than US$70 million it claimed it lost on option bets placed ahead of a May 22 Chinese government announcement targeting cross-border brokerages.
Jeff Yass’ firm said insider trading was the only plausible explanation for the trades.
The suit was an unusual one, as insider trading case are most commonly brought by the SEC and federal prosecutors.
Bloomberg News has reported that both the Justice Department and the SEC are probing the alleged trades.
Citadel Securities joined the suit the following month, saying it had also suffered losses from the activity.
A spokesperson for Susquehanna declined to comment on the ruling. Citadel Securities did not immediately respond to emails seeking comment.
Subramanian granted Susquehanna’s initial request to freeze accounts at Interactive Brokers Group, as well as the platforms of two firms targeted in the Chinese crackdown, Futu and Up Fintech.
A number of John Does subsequently identified themselves and filed responses to the suit, claiming the pattern of their trades showed they were not based on inside information.
The judge highlighted some of these arguments in his decision, saying they undermined Susquehanna’s claim that insider trading was the only possible explanation.
“This is modern trading – where algorithms, AI agents, and career traders are all jockeying, minute by minute, for the newest hot trade, using analyst information, market trends, news reports, scuttlebutt from online forums, and other tea leaves to make split-second decisions,” Subramanian wrote.
“True, insider trading could be one explanation, but there needs to be more to support locking up millions of dollars in funds for the duration of a lawsuit.”
The lawsuit focuses on 200,000 short-dated put option bets on brokerages targeted in the Chinese crackdown.
Futu and Up Fintech were among those firms whose shares plummeted after Chinese regulators announced they were taking action.
Susquehanna alleged the Does collectively purchased US$12 million in options that yielded a profit of more than US$100 million.
In a court filing in August, Susquehanna and Citadel Securities said that, based on information subpoenaed from the brokers, they were seeking a narrower freeze to focus on accounts held by 45 traders. They said they were dropping claims against dozens of other Does.
Susquehanna also said in August that it had reached an agreement to resolve its claims against a defendant who allegedly made some of the largest profits in the scheme, a Hong Kong-based trader identified only as John Doe 1.
In an Aug 21 court filing, John Doe 1 described himself in court filings as a “principal, director, and majority shareholder of a licensed financial advisory and asset management company in Hong Kong”.
He said he managed two investment funds with a collective net asset value of more than US$500 million and made more than US$52 million trading Futu puts.
John Doe 1 said the trades were “entirely consistent with his historical trading practices and strategies” and that he chose the stocks based on a “momentum trading approach”, his own analysis, and predictions based on world events. He suggested Susquehanna made its own bet on the options and lost.
“This entire case is about sophisticated market participants trying to get more money,” lawyers for John Doe 1 said in a filing. “Having lost on speculative trades in the market, plaintiffs may not speculate their way to a windfall in the courts.”
A lawyer for John Doe 1 declined to comment. BLOOMBERG
