Judge Subramanian denies Susquehanna’s $100 million asset freeze in China insider trading case

U.S. District Judge Arun Subramanian of the Southern District of New York declined on Sept. 14, 2026, to freeze nearly $100 million in assets tied to dozens of traders accused of using confidential information ahead of China’s May 22, 2026 crackdown on cross-border trading platforms.

The court concluded that Susquehanna had not shown an immediate risk that defendants would hide or move their assets before a potential judgment. It also found that the market maker had not demonstrated a sufficiently strong likelihood of proving its underlying claims at this stage.

Judge rejects request to lock up nearly $100 million

Susquehanna originally sued 100 unidentified defendants on June 29, alleging violations of Section 20A of the Securities Exchange Act of 1934 as well as unjust enrichment. Citadel Securities subsequently entered the litigation as an intervenor. The case is pending in the Southern District of New York under case number 1:26-cv-05474.

The market maker later narrowed the group covered by its preliminary-injunction request to 40 defendants. It wanted the court to prevent those traders from transferring, encumbering or otherwise disposing of funds held through third-party brokerage accounts.

Susquehanna argued that the unusual timing and size of the trades suggested the defendants could move the alleged proceeds beyond the reach of U.S. courts.

Judge Subramanian disagreed that the evidence established the required risk of irreparable harm. The court noted that simply being outside the United States, failing to appear in the lawsuit or moving money between accounts did not automatically establish an intention to defeat a future judgment.

The judge also rejected Susquehanna’s alternative request for an attachment order, which would have allowed assets to be secured while the litigation continued.

In his analysis, Subramanian warned that accepting Susquehanna’s theory too broadly could allow asset freezes to become routine in fraud and insider trading case litigation.

The court gave particular attention to Susquehanna’s claim concerning one defendant, identified as John Doe 3, who allegedly moved more than $10 million from an account before restrictions could take effect. The judge found that the claim was not adequately supported and noted that transferring money does not, by itself, prove an attempt to evade enforcement.

Suspicious put options face competing explanations

The central dispute revolves around options trading in the period immediately before China’s May 22 regulatory announcement.

Susquehanna argued that traders accumulated large positions in short-dated put options on securities including Futu Holdings and UP Fintech, commonly associated with Tiger Brokers. The company alleged that the trades were positioned to benefit from a sharp decline that followed the regulatory news.

The market maker argued that the timing was difficult to explain through ordinary market activity. Its complaint alleged that more than 200,000 short-dated put options were purchased during the weeks before the announcement, with the trades ultimately generating more than $100 million in alleged profits.

But the defendants offered alternative explanations.

Zhengfei Li, one of the traders identified in the litigation, argued that his positions could be explained by publicly observable market signals rather than advance knowledge of China’s action. His trading included positions expiring both before and after May 22.

Li pointed to unusually heavy options activity before the announcement. According to the court’s discussion, the put-to-call ratio reached approximately 49-to-1 on May 21, providing a possible public-market signal that traders could have interpreted as evidence of looming negative news.

That distinction is important because U.S. insider-trading law generally requires more than an unusually profitable or well-timed trade. Liability can depend on whether a trader used material nonpublic information obtained through a breach of a fiduciary or similar duty. SEC materials describe material information as information a reasonable investor would consider important, while nonpublic information remains confidential until effectively communicated to the market.

Court says Susquehanna has not yet connected the traders

The merits of the insider trading case presented another obstacle for Susquehanna.

The company needed to show more than suspicious trading patterns. The court examined whether Susquehanna had sufficiently established that the traders possessed material nonpublic information and that the information was obtained through a legally relevant duty of trust or confidence.

Subramanian found gaps in that chain.

Susquehanna had not identified the alleged source of the confidential information, the specific fiduciary duty allegedly breached or the personal benefit received by an alleged tipper. Those issues are significant under established insider-trading doctrine, which recognizes both fiduciary-duty and misappropriation theories of liability.

The judge also questioned the broad way the defendants had been grouped together. Some trades appeared more unusual than others, but Susquehanna’s case initially involved 100 anonymous defendants who were not necessarily connected to one another.

That made individual explanations particularly important.

The court therefore declined to treat unusual trading activity alone as sufficient proof that every defendant had access to confidential information.

The ruling does not mean the court has determined that the allegations are false. Instead, it means Susquehanna did not meet the higher evidentiary burden required at this stage to obtain extraordinary remedies against the defendants’ assets.

China crackdown remains at the center of the dispute

The regulatory announcement at the heart of the insider trading case concerned China’s scrutiny of overseas trading platforms serving mainland investors.

The alleged trading occurred shortly before the May 22 development, giving the timing of the options purchases central importance to Susquehanna’s theory.

The complaint contends that traders positioned themselves for a market decline before the information became public. Susquehanna’s theory is therefore heavily dependent on establishing that the traders knew something the wider market did not.

The defense position is materially different: traders could have observed market activity, rumors or other publicly available indicators and made speculative bets without receiving confidential information.

That distinction will remain important as the litigation progresses.

The court’s latest decision also leaves open questions surrounding damages. Susquehanna has acknowledged using hedging strategies, while the court said the record did not yet establish precisely how much of the defendants’ alleged gains corresponded to losses suffered by the plaintiffs.

The insider trading case therefore moves forward without the broad asset freeze Susquehanna sought.

The court denied both the preliminary injunction and the alternative attachment request. An earlier restriction on the disputed funds was scheduled to expire at 5 p.m. Eastern Time on Sept. 16.

For now, the decision leaves the underlying allegations unresolved. Susquehanna still has the opportunity to pursue its claims, but the latest ruling makes clear that suspicious trading patterns alone were not enough to justify freezing almost $100 million while the dispute continues.

The next phase of the insider trading case will likely turn on whether Susquehanna can develop more specific evidence connecting individual traders to the alleged confidential information, its source and the duties allegedly breached.