Federal prosecutors have charged two Robinhood engineers with commodities and wire fraud for allegedly using confidential information about planned cryptocurrency listings to trade perpetual futures on Hyperliquid.
According to the U.S. Attorney for the Southern District of New York, Hefu Chai, 36, and Huaisong Xiang, 30, traded perpetual futures contracts linked to crypto tokens ahead of Robinhood Crypto listing announcements between 2025 and 2026. Prosecutors allege Chai traded before at least 10 listing announcements and Xiang before at least 11, with each earning more than $50,000 from the trades. If convicted, each defendant could face up to 10 years in prison.
Both engineers were designated "Coin Aware Individuals" with access to a private Slack channel containing information about planned token listings. Robinhood policy prohibited these employees from trading the tokens on any platform before and for 24 hours after public listing announcements.
Enforcement on Decentralized Platforms
The case establishes that trading derivatives on decentralized platforms remains subject to federal fraud laws. Prosecutors argued that the use of perpetual futures on a decentralized exchange did not shield the alleged trades from commodities and wire-fraud statutes.
Perpetual futures are derivative products that allow investors to take positions on price movements of underlying digital assets without owning them. Unlike traditional futures contracts, perpetuals do not expire and can be maintained indefinitely, with traders receiving or making periodic funding payments to maintain positions.
Company Response
A Robinhood spokesperson stated that the company "takes market integrity seriously and has zero tolerance for insider trading." The company said it immediately investigated the matter and reported it to law enforcement and regulators, pledging continued cooperation with authorities.
