Federal prosecutors charged two Robinhood engineers, Hefu Chai and Huaisong Xiang, with commodities fraud and wire fraud for allegedly trading Hyperliquid perpetual futures using confidential information about upcoming crypto listings. Each defendant allegedly earned more than $50,000 between 2025 and 2026, and the charges carry maximum prison terms of 10 and 20 years.
Federal prosecutors charged two Robinhood engineers — Hefu Chai, 36, and Huaisong "Jerry" Xiang, 30 — with commodities fraud and wire fraud on Tuesday, alleging the pair used confidential information about upcoming Robinhood Crypto listings to trade perpetual futures on Hyperliquid before the announcements went public.
Confidential listings became a trading signal
According to the Justice Department, the engineers allegedly bought related perpetual futures ahead of the announcements between 2025 and 2026, and each earned more than $50,000 from the alleged scheme. Perpetual futures let traders speculate on an asset's price, often with leverage, without owning it, and unlike conventional futures the contracts do not expire.
Charges carry decades in prison
Chai and Xiang each face one count of commodities fraud and one count of wire fraud, charges that carry maximum prison terms of 10 and 20 years, respectively. According to The Block: "Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal," U.S. Attorney Jamie McDonald said in a statement.
A precedent from the Coinbase case
In 2022, federal prosecutors brought what they called the first cryptocurrency insider-trading tipping scheme, tied to advance knowledge of Coinbase token listings. In that earlier matter, former Coinbase product manager Ishan Wahi later pleaded guilty to wire fraud conspiracy. Prosecutors are pursuing the Robinhood case under the Commodity Exchange Act rather than bringing securities fraud charges. Unlike the Coinbase case, the Robinhood engineers are accused of trading perpetual futures rather than the underlying tokens themselves.
Robinhood, which has expanded its crypto perpetual-futures business, cooperated with the investigation, prosecutors said.
Sources: U.S. Department of Justice, Decrypt, The Block
Trading involves risk.
Risk Disclaimer
