Two Robinhood engineers face federal charges for allegedly using confidential information about upcoming cryptocurrency listings to make profitable trades on decentralized exchange Hyperliquid, according to prosecutors.
Hefu Chai, 36, and Huaisong "Jerry" Xiang, 30, each face one count of commodities fraud and one count of wire fraud. According to the Department of Justice, the engineers allegedly used nonpublic information about upcoming Robinhood Crypto token listings to buy related perpetual futures before the announcements, earning profits for their own benefit between 2025 and 2026. Each defendant earned more than $50,000 from the alleged scheme.
"Today's charges make clear that corporate insiders cannot evade the securities and commodities laws by trading based on misappropriated information in derivatives like perpetual futures, tokenized securities, or other similar financial instruments," U.S. Attorney Jamie McDonald said in a statement.
How Perpetual Futures Work
Perpetual futures, or "perps," allow traders to speculate on an asset's price—often with leverage—without owning the underlying asset. Unlike conventional futures contracts, perpetual futures do not expire. Hyperliquid operates as one of the largest decentralized platforms for trading perpetual futures and has faced increased regulatory scrutiny.
Similar Case and Legal Precedent
The charges against the Robinhood engineers follow a previous case involving former Coinbase product manager Ishan Wahi, who was charged over confidential token-listing information he allegedly shared with his brother and a friend. Wahi later pleaded guilty to wire fraud conspiracy.
In the Robinhood case, prosecutors are using the Commodity Exchange Act to pursue alleged insider trading involving derivatives rather than bringing securities fraud charges.
Robinhood cooperated with the investigation, prosecutors said. If convicted, the commodities fraud charge carries a maximum prison sentence of 10 years, while wire fraud carries a maximum of 20 years.
