A federal judge has delivered a setback to Susquehanna International Group's lawsuit alleging it lost tens of millions of dollars due to insider trading. US District Judge Arun Subramanian on Tuesday denied Susquehanna's request to maintain a freeze on the alleged traders' accounts. The judge cited a lack of sufficient evidence from Susquehanna to justify extending the freeze, particularly noting that the market-making firm had not identified an alleged "tipper" who provided inside information.
This ruling means that the proceeds from the alleged scheme, which involved turning approximately $12 million in options purchases into over $100 million, could become accessible again. Susquehanna claims roughly $70 million in losses as a counterparty to these trades. The alleged insider trading occurred in May, just before the Chinese government announced a crackdown on unlicensed brokerages, causing shares of US-listed Chinese fintech platforms FUTU Holdings and UP Fintech (TIGR) to tumble.
Susquehanna filed its lawsuit on June 29 in the Southern District of New York, alleging that unidentified traders had access to non-public information about the impending Chinese regulatory action. Citadel Securities also intervened in the case, claiming its own losses of approximately $28 million from serving as a counterparty to the same options positions. While the judge's decision doesn't dismiss the case entirely, it highlights the challenge of recovering funds when defendants are unidentified, increasing the risk that profits could be moved to other jurisdictions.
