CSRC is monitoring Susquehanna’s US lawsuit alleging insider trading in Futu and Up Fintech put options before China’s 2025 cross-border securities crackdown.
Event Overview: Cross-Border Regulatory Shock and Options Activity
In early July 2026, the China Securities Regulatory Commission (CSRC) publicly confirmed that it was closely tracking a civil tort lawsuit filed by US market maker Susquehanna International Group in the United States District Court for the Southern District of New York. The case, Case 1:26-cv-05474, alleges that around 100 anonymous traders used material non-public regulatory information before the joint announcement by multiple Chinese authorities on 22 May 2025 targeting illegal cross-border securities business, generating combined profits of more than US$100 million within a two-week window through put options on Futu Holdings and Up Fintech.
The CSRC’s Official Response
Key Statements in the Written Response
In a written statement, the CSRC said that the regulator was monitoring the lawsuit, but clearly denied that trading activity in the US market fell within its direct jurisdiction. The statement also noted that the relevant penalty decisions had been lawfully communicated to the cross-border brokers involved before public disclosure, and that there had already been broad market expectations regarding the action.
“Chinese securities regulators and other relevant authorities have established strict internal control and management systems. The trading activities mentioned in the lawsuit took place in the US market and are therefore subject to the relevant US laws and regulations.”
(Source: CSRC public statement, cited by The Malaysian Reserve,China keeping close eye on Susquehanna case against alleged insider traders, published: 2026-07-07; Yahoo Finance,China Watchdog Monitoring US Lawsuit Over Insider Trading Claims, published: 2026-07-07.)
Core of the Lawsuit: Allegations by Susquehanna and Citadel
Alleged Insider Trading Route
In June 2026, Pennsylvania-based options market maker Susquehanna International Group filed a complaint with the United States District Court for the Southern District of New York, naming around 100 unidentified “John Doe” traders as defendants and alleging a “brazen insider trading scheme”. The complaint stated that the alleged traders spent around US$12 million buying put options on Futu Holdings and Up Fintech between 8 May 2025 and 22 May 2025, the alleged window period, and made more than US$100 million after the regulatory announcement was released.
Representative trades cited by Susquehanna in the complaint showed that one trader bought Futu Holdings put options on 20 May 2025 with a strike price of US$102.45 per share, while Futu’s share price remained above US$124 that day and the option contracts were priced at around US$1.50 each. After the regulatory announcement on 22 May 2025, Futu’s share price fell sharply, and the relevant option contracts once surged to US$14, representing an increase of more than eight times.
Counterparty Losses for Market Makers
Another US market maker, Citadel Securities, subsequently applied to join the lawsuit. In its filing, the company stated that, as a counterparty, it had lost around US$28 million in the alleged insider trading, and raised the total estimated scale of alleged illicit profits to around US$137 million. Susquehanna itself, as the counterparty to most of the alleged trades, lost around US$71.4 million.
On 30 June 2026, the presiding judge granted Susquehanna’s application, allowing it to issue subpoenas to the brokers used by the alleged traders and to freeze the related accounts. During the proceedings, the US Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ) both confirmed that they had opened independent investigations into the relevant trades.
(Source: Wall Street Journal,Insiders Made $100 Million on China Brokerage Crackdown, Trading Firm Alleges, published: 2026-06; Bloomberg,Susquehanna Can Subpoena Alleged Insiders' Brokers, published: 2026-06-30; Claims Journal,Citadel Securities Asks to Join Susquehanna Insider Lawsuit, published: 2026-07-07.)
Timeline of China’s Regulatory Action on 22 May 2025
On 30 December 2022, the CSRC first clarified the compliance boundaries for cross-border securities business, finding that offshore brokers including Futu and Tiger Brokers had breached rules by soliciting mainland investors without holding the required licences, and launched a two-year transitional arrangement. The joint announcement on 22 May 2025 was a continuation and escalation of this regulatory path. The key milestones were as follows:
22 May 2025 (Beijing time, announcement window): the CSRC, the People’s Bank of China, the Ministry of Public Security and other authorities jointly issued the Implementation Plan on Cracking Down on Illegal Cross-Border Securities Business.
Around 10 minutes after the announcement on 22 May 2025: the CSRC published proposed administrative penalties against Futu Securities, Tiger Brokers and Longbridge Securities, including confiscation of illegal gains and substantial fines.
After the Nasdaq opened on 22 May 2025: Futu Holdings (FUTU) and Up Fintech (TIGR) faced concentrated selling pressure, with Futu falling around 37% to 39% in a single day and Up Fintech dropping around 35.3%.
From 22 May 2025 to 26 May 2025: Futu Holdings announced that it would use US$160 million to repurchase shares in order to stabilise its share price; the Hong Kong Securities and Futures Commission also strengthened compliance reviews of mainland investor accounts.
June 2026: Susquehanna formally filed its complaint with the US court, initiating civil discovery procedures.
30 June 2026: the United States District Court for the Southern District of New York approved Susquehanna’s application to issue subpoenas to the brokers used by the alleged traders.
Comparison of Parties and Amounts Involved
| Party | Role | Amount Involved | Key Date |
|---|---|---|---|
| Susquehanna International Group | Plaintiff, market maker and counterparty | Loss of around US$71.4 million | Lawsuit filed in June 2026 |
| Citadel Securities | Applicant to join as plaintiff, market maker | Loss of around US$28 million | Joined the lawsuit in July 2026 |
| Anonymous traders (around 100 people) | Defendants, alleged insider traders | Alleged profits of US$100 million to US$137 million | Trades from 8 May to 22 May 2025 |
| Futu Holdings (FUTU) | Broker involved, subject of penalties | CSRC proposed fine of around US$271 million | Announcement on 22 May 2025 |
| Up Fintech (TIGR) | Broker involved, subject of penalties | CSRC proposed fine of more than US$50 million | Announcement on 22 May 2025 |
Cross-Border Enforcement Challenges and Market Spillover Effects
An Overlap of Three Jurisdictions
The complexity of the lawsuit lies in the fact that the alleged source of the insider information appears to be in mainland China, the trading activity took place in the US options market, and the brokers involved are incorporated in the Cayman Islands and mainly operate in Hong Kong and Singapore. This structure creates practical challenges for cross-border coordination and enforcement assistance among the US Securities and Exchange Commission, the US Department of Justice and the CSRC. The CSRC’s July 2026 statement indicates that Beijing is inclined to leave the trading dispute to US regulators to handle under local law, while stressing the compliance and information-segregation mechanisms within China’s regulatory system.
Derivative Impact on US-Listed Chinese ADRs
After the incident, market participants reassessed the derivatives pricing risks of US-listed Chinese ADRs that are highly exposed to Chinese regulatory policy. The main derivative effects were reflected in the following areas:
Market makers generally strengthened abnormality detection for short-dated options trading before policy announcement windows, raising counterparty review standards and margin requirements.
Cross-border brokers faced higher obligations in relation to customer identification, suspicious transaction reporting and cooperation with account freezes.
Index-based and active institutional investors reassessed derivatives exposure linked to Chinese ADRs and adjusted hedging structures.
On 22 May 2025, the paper wealth of Futu Holdings founder Li Hua fell by around US$1.7 billion, while the share prices of both Futu and Up Fintech had not recovered to pre-announcement levels within three months of the event.
(Source: Forbes,Futu Founder Li Hua Wealth Tracker, updated in August 2025; Reuters,China to crack down on illegal cross-border securities activities, published: 2025-05-22; Xinhua,China to penalize 3 brokerages as crackdown on illegal cross-border securities business continues, published: 2025-05-22.)
Questions About Futu Holdings and Up Fintech
What is the CSRC’s official position in this case?
The CSRC stated that it was closely monitoring the progress of the lawsuit, but denied that options trading in the US market fell within its direct jurisdiction. It also stressed that regulators had established strict internal control and management systems, that the relevant penalties had been lawfully communicated to the brokers involved before public disclosure, and that the market had already expected regulatory action itself.
Why are Susquehanna and Citadel Securities regarded as victims?
Both companies are major US options market makers and acted as counterparties in the alleged insider trading. According to public complaints and court filings, Susquehanna lost around US$71.4 million and Citadel Securities lost around US$28 million, corresponding to total alleged profits of US$100 million to US$137 million for the alleged traders.
What was the main content of China’s regulatory announcement on 22 May 2025?
The CSRC, the People’s Bank of China, the Ministry of Public Security and other authorities jointly issued the Implementation Plan on Cracking Down on Illegal Cross-Border Securities Business, announcing administrative penalties against Futu Securities, Tiger Brokers and Longbridge Securities for conducting business in mainland China without the required licences. The measures included confiscation of illegal gains and fines totalling hundreds of millions of US dollars, while relevant accounts were required to enter a two-year transitional arrangement.
What actions have US regulators taken so far?
The US Securities and Exchange Commission and the Department of Justice have opened independent investigations into the relevant options trades. On 30 June 2026, the United States District Court for the Southern District of New York approved Susquehanna’s request to issue subpoenas to the brokers used by the alleged traders and to freeze the related accounts. Whether the civil investigation will escalate into criminal charges has not yet been announced.
Are ordinary investors directly affected by this incident?
For mainland investors who already hold overseas securities accounts through platforms such as Futu and Tiger Brokers, regulators have set a two-year transitional period. Existing assets in those accounts may continue to be held or orderly unwound during the transition period, while new account openings and new solicitation activities are prohibited. Investors should monitor compliance announcements from the platforms they use and guidance from local regulators.
