Susquehanna International Group has announced its decision to settle with a number of individuals it accused of insider trading related to a Chinese regulatory crackdown. This move comes after US District Judge Arun Subramanian recently denied Susquehanna's request to freeze the alleged traders' accounts, citing insufficient evidence to justify the continued freeze. The judge had indicated that Susquehanna failed to identify a "tipper" of the inside information and suggested other plausible explanations for the trades, undermining the firm's claim that insider trading was the sole reason for the highly profitable options bets.
The lawsuit, filed in Manhattan federal court in late June, sought to recover over $70 million that Susquehanna claimed to have lost as a counterparty to these trades. The firm alleged that the John Doe defendants made more than $100 million in profits from options purchased for approximately $12 million. These trades involved short-dated put options on the shares of cross-border brokerages Futu Holdings Ltd and Up Fintech Holding Ltd, placed in the two weeks leading up to a Chinese government announcement on May 22, 2026, which led to a significant drop in the stock prices of these companies.
Several John Does had identified themselves and countered Susquehanna's allegations, arguing that their trading patterns were consistent with their historical strategies and not based on inside information. For example, a Hong Kong-based trader, identified as John Doe 1, who allegedly made over $52 million trading Futu puts, stated his trades were part of a "momentum trading approach" based on his own analysis and world events. The judge also highlighted that modern trading involves algorithms, AI agents, and career traders using various information sources, making it difficult to definitively attribute such trades solely to insider information without stronger proof.
While Susquehanna had initially secured an order to freeze accounts at Interactive Brokers Group, Futu, and Up Fintech, the judge's recent decision cast doubt on the case's continuation. This settlement indicates a strategic shift by Susquehanna, likely aimed at avoiding prolonged litigation after the court's skeptical stance. It also highlights the complexities of proving insider trading in a rapidly evolving financial market where sophisticated trading strategies can yield substantial profits.
