Australian trader accused of spoofing remains unavailable for prosecution in the United States

Maria Nikolova

The US Department of Justice has charged Jiongsheng (“Jim”) Zhao with wire fraud, commodities fraud, making false statements to the CME, and spoofing offenses.

The Honorable Ruben Castillo of the Illinois Northern District Court has signed an Order giving more time to the US Government to file information or indictment in the criminal case against Australian trader Jiongsheng “Jim” Zhao accused of spoofing. The period is extended until September 28, 2018.

Let’s recall that in January this year, the United States Department of Justice charged Jiongsheng (“Jim”) Zhao, 30, of Australia, in a criminal complaint with wire fraud, commodities fraud, making false statements to the CME, and spoofing offenses when he was a trader at a proprietary trading firm located in Sydney, Australia. According to the complaint, data analysis identified hundreds of instances of spoofing by Zhao on the CME between approximately July 2012 and March 2016. Additionally, the complaint alleges that Zhao made false written statements to the CME after being confronted with allegations of his disruptive trading practices.

Zhao is alleged to have engaged in the deceptive pattern approximately 2,300 times, which included 3,100 discrete instances of spoofing (bidding or offering with the intent to cancel the bid or offer before execution).

On January 29, 2018, the defendant was arrested by the Australian Federal Police and was remanded into custody pending extradition. He is currently facing extradition proceedings in the Commonwealth of Australia, and on May 21, 2018, he consented to extradition to the United States.

Even with Zhao’s consent, however, before his extradition can occur, the Australian Attorney General must authorize and sign a surrender order that formally authorizes the extradition. In connection with that process, Zhao has made certain representations regarding why he should not be surrendered, which the Australian Attorney General is considering before issuing the surrender order.

Once that order is issued, the US authorities will have sixty days under the extradition treaty to take custody of Zhao and bring him to the United States for prosecution. Accordingly, until Australia issues the surrender order, and the United States is able to take the trader into custody and bring him to the United States to make an initial appearance, he remains unavailable for prosecution in the United States.

The criminal case against the trader is captioned USA v. Zhao (1:18-cr-00024).

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