Robinhood engineers Hefu Chai and Huaisong Xiang are accused of profiting more than $50,000 each through trading ahead of token listing information on Hyperliquid, facing up to 30 years in prison.
The U.S. Department of Justice (DOJ) announced on Tuesday that it has charged two former Robinhood engineers for allegedly using confidential information about upcoming listings of crypto assets to profit on the decentralized exchange Hyperliquid. Hefu Chai, 36, and Huaisong “Jerry” Xiang, 30, each face one count of wire fraud and one count of securities fraud via electronic means.
Federal prosecutor Jamie McDonald emphasized that corporate insiders cannot evade securities and commodities laws by trading based on unlawfully taken information through derivatives such as perpetual futures contracts, tokenized securities, or similar financial instruments.
How the trading was carried out and Robinhood’s response
According to the indictment, the two defendants used non-public information about upcoming token listings on Robinhood Crypto to buy perpetual futures contracts, a type of derivatives product commonly known as “perps,” which allows traders to speculate on price movements of an asset, often using leverage, without needing to own that asset and without an expiration date like traditional futures contracts—before the listing information was officially made public.
The conduct is alleged to have taken place between 2025 and 2026 on Hyperliquid, one of the largest decentralized platforms for trading perpetual futures contracts, and which is currently facing increasing levels of regulatory scrutiny. The Justice Department said each defendant allegedly received more than $50,000 from the conduct at issue.
A Robinhood spokesperson said the company values market integrity and will not tolerate insider trading, and also stated that it has put in place strict policies and procedures on the matter, including for new listings of crypto assets.
The company said it immediately investigated and reported the matter to law enforcement agencies as well as regulators, and will continue to cooperate with the investigation process. According to prosecutors, Robinhood—the company expanding its business in perpetual futures contracts for crypto assets—cooperated throughout the course of the investigation.
This case echoes a precedent involving former Coinbase product manager Ishan Wahi, who was previously charged with sharing confidential information about token listings with his brother and a friend, and later pleaded guilty to conspiracy to commit electronic fraud.
However, the notable difference in the Robinhood case is that prosecutors chose to use the Commodity Exchange Act to prosecute allegations of insider trading involving derivatives, rather than bringing securities fraud charges as was customary before—an approach that reflects the unique legal status of perpetual futures contracts within the commodities regulatory framework in the U.S.
If convicted, the two defendants could face up to 10 years in prison for commodity fraud charges and up to 20 years for electronic-facility fraud charges, for a total of up to 30 years of incarceration for each person.