Key facts
- Former Robinhood engineers Hefu Chai and Huaisong Xiang face commodities fraud and wire fraud charges.
- Prosecutors allege they used nonpublic information on planned crypto listings for personal trades.
- The alleged trades occurred on the Hyperliquid decentralized exchange between 2025 and 2026.
- Each engineer allegedly profited over $50,000.
- Robinhood has cooperated with the investigation.
Federal prosecutors have charged two former Robinhood engineers, Hefu Chai and Huaisong Xiang, with commodities fraud and wire fraud for allegedly exploiting confidential information about upcoming cryptocurrency listings. The engineers are accused of using this nonpublic information to trade perpetual futures on the decentralized exchange Hyperliquid between 2025 and 2026, thereby earning profits for themselves. Each defendant allegedly made over $50,000 from the scheme.
According to the U.S. Department of Justice, Chai and Xiang had access to a private company Slack channel containing information about planned listings. Prosecutors allege they used this information to open long positions on Hyperliquid, closing them after their value increased following their debut on Robinhood. The company's policy prohibited members of the "Coin Aware Individuals" group from trading around listings.
U.S. Attorney Jamie McDonald stated that corporate insiders cannot evade securities and commodities laws by trading misappropriated information through perpetual futures, tokenized securities, or similar instruments. If convicted, Chai and Xiang face a maximum of 10 years for violating the Commodity Exchange Act and 20 years for wire fraud. Robinhood has reportedly cooperated with the investigation.