China’s crackdown on offshore securities trading hit one of the biggest US trading firms to the tune of $70 million — and shows that (alleged) insider trading hasn’t moved entirely to prediction markets.
Susquehanna Investment Group sued 100 unnamed defendants who it says placed suspicious trades before Beijing last month targeted three online brokers popular with mainland Chinese investors trading foreign stocks. The accounts bought options that would increase in value as the shares of those brokerages, which trade on the Nasdaq, fell, as they did following the announcement from China’s financial regulator.
Susquehanna was on the other side of those trades, which it says were mostly placed through US-based Interactive Brokers. The firm also said that the allegedly ill-gotten gains are larger than those in the Galleon insider-trading case that sent Raj Rajaratnam to prison in the early 2010s.
As much as prediction markets like Kalshi and Polymarket have provided a playground for insiders looking to profit from their edge, the stock market is still a tempting venue.