Transcription
A private trading firm that most people have never heard of just generated almost $40 billion in revenue in a single year. That figure is larger than the entire trading division of Goldman Sachs, exceeds JP Morgan's markets unit, and dwarfs Morgan Stanley's.
The firm in question is Jane Street, and they have no public shareholders, no quarterly earnings calls, no investor day, and no regulator-mandated disclosures explaining where any of the money actually came from. India's market regulator has formally accused them of manipulating an entire stock index for $4.3 billion in profit. They bought the FTX bankruptcy estate stake in Anthropic for around $100 million, a position now estimated to be worth roughly 22 times that. And in a strange full-circle twist, Sam Bankman-Fried himself cut his teeth at Jane Street before leaving to launch the empire that would become FTX.
So, this video is about how this secretive trading firm became more powerful than all the investment banks you've heard of, what regulators are now accusing them of doing to get there, and what their rise tells you about who is sitting on the other side of every trade you place. My name is Guy, and this is Coinbau Finance.
Now, let's start with the mind-boggling fact of how Jane Street's reported net trading revenue for 2025 sits at roughly $39.6 billion. For context, Goldman Sachs's entire global markets division produced around $31 billion across the same period, and JP Morgan's markets unit landed near $35.8 billion. Morgan Stanley's institutional securities arm, Bank of America's global markets, and Citi's market segment all came in materially lower.
Now, Goldman has roughly 46,000 employees and a balance sheet supervised by the Federal Reserve, the OCC, and the SEC. Jane Street has under three and a half thousand people, no public filings, and answers to almost nobody in the way that banks do. The arithmetic on Jane Street's revenue per head works out to something close to $11 million per employee.
And the obvious question, the one that should be on the front page of every business publication in the world, is how? How does a private trading firm in a building most New Yorkers walk past without a second glance produce more revenue than the most storied investment bank on Earth while explaining precisely none of it to the public?
Well, the answer comes in four parts. And once you see them stacked on top of each other, the picture starts to make more sense.
So, the first engine is exchange-traded fund, or ETF, arbitrage. So when you buy an ETF, somebody has to actually create the underlying basket of shares it represents, and somebody has to redeem it when investors sell. Jane Street is one of a tiny handful of firms globally that sits inside that creation and redemption pipeline, controlling around a quarter of the entire US-listed ETF primary market. Every time the ETF price drifts a fraction of a percent away from the value of the underlying basket, a firm wired into both sides of that trade can capture the gap. And with the volumes Jane Street operates at, those fractions become a river of money flowing through the firm every single trading day.
Now, the second engine is options market making, particularly in equity index options, where Jane Street has built one of the most dominant positions on the planet. Roughly 87% of the firm's $662 billion portfolio is tied to derivatives, which tells you almost everything you need to know about where the real risk and the real reward actually sit.
The third engine is one that has now exploded into a global regulatory scandal, and we'll get to it in a moment.
And the fourth is fixed income electronification. The steady migration of bond trading from phone calls between human dealers to algorithmic execution on screens, where firms like Jane Street have systematically taken share from the traditional bond desks at the big banks.
Now, each of these businesses on its own would build a serious financial firm. Run all four of them at maximum scale with proprietary technology and a culture obsessed with measuring expected value on every decision, and you start to understand how that headline number gets built.
But the story of where the recent doubling came from runs through one country in particular, and that brings us to the part of this story regulators are now treating as a crime scene.
In the summer of 2025, India's Securities and Exchange Board, known as SEBI, did something almost no major regulator on Earth had been willing to do. They banned Jane Street from Indian markets, accusing the firm of manipulating the Bank Nifty index across multiple expiry days and moved to claw back roughly $4.3 billion they say the firm extracted through that manipulation.
The alleged mechanics, according to SEBI's own filings, work like this: Jane Street would build very large positions in Bank Nifty index options ahead of expiry. Positions that would pay out enormously if the index closed at certain levels. Then, on the day of expiry, the firm would trade the underlying basket of bank stocks aggressively, using its market-making firepower to push the index towards the level where its options positions paid out. The cash leg of the trade was structured to lose a relatively small amount. The derivatives leg, though, was structured to win a multiple of that, several times over.
So, SEBI's accusation in plain English is that Jane Street was not predicting where the index would settle. They were deciding it.
Now, Jane Street disputes this characterization, and it is important to be clear that these are regulator allegations rather than proven findings in a final court ruling. But the substance of the case is now extensively documented in SEBI's own published orders. And it is the central reason the firm's revenue jumped the way it did over the last two years.
And just when you think the story can't get more revealing, it does, because Jane Street themselves told the world how valuable this trade was. Sometime before the SEBI action went public, Jane Street did something firms of their size almost never do. They sued a competitor, the multistrategy hedge fund Millennium, along with two former Jane Street traders who had jumped ship.
Now, the allegation in that lawsuit was that the departing traders had walked out of the door with proprietary India option strategies, and that those strategies were uniquely, extraordinarily valuable. Think about what that filing actually reveals. A firm whose entire business model is built on never disclosing how it makes money voluntarily walks into a public courtroom and puts on the record that this single strategy was so important it justified airing the matter in front of judges, journalists, and rival traders. The Millennium suit is, in effect, a sworn statement that the India derivatives book was the crown jewel, and the strategy Jane Street fought to protect in that courtroom is the same strategy Indian regulators are now investigating as market manipulation.
So, both stories, the lawsuit and the SEBI action, are about the same trade, which is not a coincidence, but rather what happens when a single, highly engineered position generates several billion dollars of profit in a single year, and the rest of the financial world starts to notice.
Now, if you've stayed with me this far, you might assume the story ends in Mumbai. It doesn't, though, because there is an entire dimension of Jane Street's business that almost no mainstream coverage has properly addressed, and it sits at the center of every digital asset market on Earth.
Jane Street is one of the largest crypto market makers in the world. In 2024 alone, they tripled their crypto trading volumes, purchasing around $110 billion worth of cryptocurrencies and stablecoins as part of their market-making activity. They are an authorized participant for BlackRock's IBIT and Fidelity's FBTC, the two largest spot Bitcoin ETFs in existence. And that status gives them the right to exchange actual Bitcoin directly for ETF shares, an arbitrage privilege that's unavailable to ordinary institutional investors. At their peak in 2025, their position in IBIT was estimated near $2.5 billion.
And the reason crypto is so attractive to a firm like Jane Street is that crypto markets are essentially the perfect environment for the kind of trading they do. Liquidity is fragmented across dozens of global exchanges with no equivalent of the unified national best bid and offer that compresses spreads in US equities. The markets never close, running 8,760 hours a year against roughly 1,690 trading hours for traditional stocks. Volatility on assets like Bitcoin regularly runs above 50% against around 15% to 20% for the S&P 500, and wider volatility translates directly into wider spreads that a market maker can capture.
And perhaps most importantly, the natural competition for this business, the regulated banks, has been basically locked out. Under current Basel Capital rules, an unbacked crypto position attracts a risk weight of 1,250%, which makes it economically impossible for a bank to hold any meaningful inventory. Add the Volcker Rule, the post-2008 trading book reforms, and the reputational hangover from the FTX collapse, and you get a market with massive volume, wide spreads, and almost no large bank competitors.
And speaking of FTX, the connection there is one that has been wildly mischaracterized, so it's worth being precise about it. Sam Bankman-Fried worked at Jane Street as an ETF trader from 2013 to 2017. Caroline Ellison interned there, joining full-time in 2016 and was mentored by SBF before eventually leaving to run Alameda Research. The intellectual DNA of the early crypto strategies that built and then destroyed Alameda and FTX came directly out of Jane Street's training program. There is no public evidence, though, that Jane Street as an institution participated in the FTX fraud, and I want to be careful with that distinction. But the firm was a major counterparty to FTX as a liquidity venue, and when the exchange collapsed in late 2022, Jane Street pulled back from parts of crypto, only to re-expand aggressively once spot Bitcoin ETFs launched in early 2024.
Meanwhile, there's also a live legal situation worth mentioning. In February 2026, the Terraform Labs bankruptcy estate filed suit against Jane Street, alleging the firm used material non-public information to profit from the May 2022 Terra and Luna collapse. The complaint claims a Jane Street-linked wallet pulled $85 million in UST out of liquidity pools within 10 minutes of Terraform's own withdrawal, allegedly accelerating the death spiral that wiped out $40 billion in value. Jane Street has moved to dismiss, calling the claims baseless.
Now, this is contested litigation, not a finding of fact. But the simple existence of the lawsuit tells you how central the firm has become to the very plumbing of digital assets.
Okay, now let's pull back a bit, because the most important part of this story is not Jane Street as a single firm, but the system Jane Street is the most visible example of. The most powerful trading institutions in the world today are no longer the banks whose logos sit on the buildings you walk past. Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America, and Citigroup are publicly listed, regulated, capital-constrained, and shrinking in their share of trading risk.
The firms that have absorbed much of that risk are private, founder-controlled, and subject to a fraction of the disclosure requirements imposed on the regulated banking sector. Citadel Securities, run by Ken Griffin, handles roughly a third of all US retail equity trades and produced around $12.2 billion in trading revenue in 2025. Susquehanna International Group, the firm built by Jeff Yass on the principle that every security is an options pricing problem, sits as one of the three dominant US retail wholesalers and happens to also hold a stake in ByteDance worth tens of billions. Jump Trading, Hudson River Trading, DRW, and Virtu round out an ecosystem that, in aggregate, now generates more trading revenue than the entire publicly listed Wall Street banking sector.
And these firms operate with a structural advantage the banks cannot touch. They are not classified as globally systemically important institutions. They're not required to file 10-Ks. They do not hold deposits, so they sidestep an enormous slice of capital regulation. And they're not subject to the Volcker Rule constraints on proprietary trading, because that rule only applies to banking entities. They make markets in equities, bonds, ETFs, options, futures, and crypto. And they do so with minimal external scrutiny.
So, the $39.6 billion number we started with is the proof point that the center of gravity in global finance has already moved, and the public conversation around it has not caught up.
Which brings us to the part of this story that actually touches your portfolio. When you buy an ETF in your brokerage account, a firm like Jane Street is sitting on the other side of that trade as the authorized participant making the market exist in the first place. When you place an options trade, the order is being filled by Citadel Securities, Jane Street, or Susquehanna's wholesale arm, almost never by a public exchange in the way most retail investors assume. When you click buy on Robinhood, your order is routed through payments for order flow to one of those wholesalers. And Jane Street alone paid Robinhood $61.3 million for stock flow and another $15.2 million for derivatives flow in 2025. Across the top three retail wholesalers, more than 80% of US retail equity orders never see a public exchange at all.
A 2025 study published in the Journal of Finance examined 85,000 simultaneous market orders across five brokers and found that roundtrip costs varied from seven basis points to 46 basis points, depending entirely on which broker filled the order. So, "free trading," in other words, is not free. It's paid for through differences in execution quality that the average retail investor has no realistic way to measure or compare.
Now, the SEC, under previous leadership, tried to do something about this through the proposed order competition rule, which would have forced more retail orders into open auctions. That rule, however, was formally withdrawn in June 2025, alongside more than a dozen other market structure reforms. SEC enforcement actions in fiscal year 2025 fell to 313, the lowest in a decade. The regulatory wind is blowing in exactly the direction that benefits the shadow trading ecosystem at precisely the moment that ecosystem has become most powerful.
So, a trading firm with fewer than three and a half thousand employees and almost no public disclosures generated nearly $40 billion of trading revenue in a single year, more than Goldman Sachs's entire markets division and more than every other major Wall Street bank's trading arm. That marks a shift in how global markets are organized, where the regulated banks have been hemmed in by capital rules and prop trading restrictions, and where private firms have moved into the vacuum with better technology, fewer constraints, and a level of opacity that would be unthinkable for any publicly listed competitor.
The India case will determine whether other regulators around the world start treating these firms with the scrutiny their scale now demands, or whether the SEBI action remains an outlier that the rest of the world simply admires from a distance. Meanwhile, the Millennium lawsuit confirms, in Jane Street's own words, that the strategies driving these returns are valuable enough to drag a private trading house into open court to defend. The dominance in crypto market making means that anyone trading digital assets, knowingly or not, is transacting against this same firm or one of its peers on the other side of the order book.
So, the story here is really that the most important financial institutions in the world today now operate almost entirely outside the public's working understanding of how markets actually function. Whether regulators eventually address that asymmetry, or whether it simply becomes the permanent shape of global finance, will define the next decade of market evolution. Either way, the next time someone tells you that Wall Street is run by the names on the towers, remember that the actual revenue, the actual risk, and the actual power left those buildings a long time ago.
Okay, well, that's about it for today, but please give us a like if you enjoyed this video. Subscribe if you want to see more. And thanks to all of you for watching. My name is Guy. See you next time.