One of the most closely watched insider trading disputes growing out of the crypto markets just took a turn against one of Wall Street’s biggest trading firms. A New York federal judge has denied Susquehanna’s request to freeze nearly 100 million USD in profits allegedly earned by dozens of anonymous traders who bet against Chinese securities just before Beijing announced a crackdown on cross-border trading platforms.
The ruling, issued as a September 14 opinion and order by Judge Arun Subramanian of the U.S. District Court for the Southern District of New York, denied both a preliminary injunction and an alternative request to attach the defendants’ assets. The decision is a significant setback for Susquehanna Securities and Susquehanna Investment Group, which had asked the court to lock down trading proceeds held at third-party brokerage firms while the case proceeds.
## The case behind the freeze request
Susquehanna filed its lawsuit on June 29 against 100 unnamed defendants, alleging violations of Section 20A of the Securities Exchange Act of 1934 and unjust enrichment. Citadel Securities later joined the case as an intervenor, underscoring how much money market makers lost on the trade.
At the heart of the dispute is trading that occurred before a May 22 announcement in which the Chinese government cracked down on cross-border trading platforms. Susquehanna alleged that dozens of traders used material nonpublic information about the impending announcement to buy highly risky, short-dated put options expiring on or shortly after May 22 — positioning themselves to profit when the news triggered a sharp decline in certain securities.
The market maker eventually narrowed its preliminary injunction request to 40 defendants, asking the court to block them from transferring, encumbering, removing or otherwise disposing of the proceeds Susquehanna claimed were derived from insider trading.
## Why the judge said no
Judge Subramanian found that Susquehanna had failed on two independent grounds. First, the firm did not show it was likely to suffer irreparable harm without a freeze. Second, it did not demonstrate a likelihood of success on the merits of its insider trading claims.
On the harm question, Susquehanna argued that the defendants’ allegedly suspicious trading created a significant risk that proceeds could be moved beyond the court’s reach. The judge rejected that logic, warning that accepting it would effectively allow asset freezes as a matter of course in insider trading and fraud cases — a standard courts have long refused to adopt.
The court examined three groups separately: domestic defendants, foreign defendants who had appeared in the case, and foreign defendants who had not. For the domestic group, Susquehanna pointed to their failure to appear as evidence funds could vanish. Subramanian found no evidence that silence equaled an intent to dodge a future judgment, noting that some defendants apparently had not yet been formally served with the suit.
For foreign defendants, Susquehanna argued their assets could be moved beyond U.S. jurisdiction. The judge held that the mere difficulty of enforcing a judgment overseas is not, by itself, enough to establish irreparable harm. The firm also failed to identify any pattern of defendants hiding funds, making fraudulent transfers, or engaging in evasive conduct. Some foreign defendants who had appeared even submitted evidence showing they held enough assets to satisfy a potential judgment.
Susquehanna came closest with one defendant, identified as John Doe 3, who allegedly withdrew more than 10 million USD from a relevant account before a freeze took effect. The court found the claim lacked supporting evidence — and noted that moving money between accounts does not necessarily show an attempt to avoid a judgment, since actively traded funds may have been reinvested or may have belonged to a fund, employer, or client.
## The trading pattern that wasn’t insider trading
The second problem was deeper. To prevail on a Section 20A claim, Susquehanna would need to show that someone owing a duty of trust and confidence used genuinely nonpublic information to trade, or tipped that information to others.
Susquehanna submitted trading charts it said left no plausible innocent explanation. But defendant Zhengfei Li offered one. His records showed two equally sized options positions — half expiring before May 22, half after — a pattern consistent with repeated speculation based on market signals rather than precise foreknowledge of an announcement date.
Li told the court that unusually heavy put option activity, visible through public market data and investor discussions, is what led him to buy his own puts. His evidence showed a put-to-call ratio of roughly 49 to 1 on May 21, the day he entered the positions that expired after the announcement. Another defendant offered a similar account, including messages documenting her surprise when the crackdown became public.
The court concluded that defendants could plausibly have noticed unusual market volatility or public posts suggesting bad news was coming and traded on those signals. Information available publicly does not qualify as nonpublic information under insider trading law — a distinction that cuts to the heart of the case.
## What it means for crypto-linked markets
The dispute matters beyond the two market makers. China’s May 22 crackdown on cross-border trading platforms rippled through crypto-adjacent securities and derivatives, and the case tested how far trading firms can go in using civil litigation — and emergency asset freezes — against anonymous counterparties they suspect traded ahead of news.
Judge Subramanian’s ruling establishes that courts will demand concrete evidence of both dissipation risk and genuinely nonpublic information before freezing tens of millions in alleged insider trading proceeds. For trading firms eyeing similar litigation strategies against anonymous options traders, the message is clear: suspicious timing alone does not unlock the courthouse’s most powerful tools.
citadel joining as intervenor tells you the losses on those may 22 puts were enormous. this suit is about deterrence more than the 100m
court refusing to freeze the 100 million basically means the alleged proceeds stay liquid while the case drags on. susquehanna cant be happy
and the china crackdown angle means half the evidence trail sits on the other side of a firewall. this case takes years
years and the money walks anyway. anonymous traders with proceeds parked at third party brokerages are not easy to collect from
liquid proceeds plus 100 anonymous does parked at third party brokerages. good luck collecting even with a win, this was always about deterrence
the short dated puts expiring right after may 22 are the evidence. whoever sized those knew the date, the does can stay nameless and the trade pattern still tells the story
the may 22 put timing is the whole case honestly. shame section 20A cares more about naming a tipper than a trade pattern that obvious
judge said no on both irreparable harm AND likelihood of success. that second one stings, susquehanna basically has no case
no case is right. section 20A needs a tipper they can actually name and they sued 100 does
narrowing the freeze request to 40 defendants and still losing tells you everything. the section 20A claim was thin from the start
they narrowed to 40 defendants and still got nothing. deterrence lawsuits need teeth, this one showed up toothless
the likelihood of success denial is the brutal part. judges dont hand that finding out casually, the section 20A theory looks dead on arrival
the denial reads worse than a normal early loss because the judge flagged the core theory as weak. they can amend but section 20A without a tipper keeps biting
both prongs denied is the rare double loss. section 20A without a named tipper was always a stretch
100 anonymous defendants and citadel piling in as intervenor. market makers lost serious money on those may 22 puts
insider trading tied to a china crypto crackdown reads like two separate cases mashed together. wild stuff
100M in disputed proceeds sitting at brokerages while the does lawyer up. even if susquehanna wins at trial the money will be long gone by collection time
Judge Subramanian denying attachment too means the 100m stays at those brokerages collecting interest while the does ghost them
collecting interest at a brokerage that knows exactly who they are lol. the anonymity protects them from the public, not from subpoenaed KYC files
kyc files only matter if the brokerage cooperates. half those accounts are probably parked at offshore shops SDNY has zero leverage over
SDNY denying both the injunction and the attachment before discovery even warms up means the judge read the 20A theory and found nothing. amended complaint names a tipper within a month or this quietly dies
amended complaint needs a tipper willing to actually talk. the trail runs through wechat and stops there, good luck serving that
a wechat tipper is not that exotic. DOJ flipped traders in the 2015 china shorting cases, SDNY just needs one of the narrowed 40 to take a deal
citadel intervening is the tell. the real plaintiffs are the market makers run over on those may 22 puts, susquehanna is just the one willing to fund the lawsuit
counterpoint, if citadel is quietly behind this that is deterrence working. nobody funds a suit against 100 anonymous does unless the may 22 put losses were real money