Key facts
- Two Robinhood engineers, Hefu Chai and Huaisong Xiang, were charged with commodities fraud and wire fraud.
- Prosecutors allege they used nonpublic information about upcoming Robinhood Crypto token listings to trade perpetual futures.
- The alleged scheme took place between 2025 and 2026.
- Each defendant allegedly profited more than $50,000.
- The charges were brought under the Commodity Exchange Act.
- Robinhood cooperated with the investigation.
Federal prosecutors have charged two Robinhood engineers, Hefu Chai, 36, and Huaisong “Jerry” Xiang, 30, 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. U.S. Attorney Jamie McDonald stated that corporate insiders cannot use misappropriated information for trading in derivatives like perpetual futures. Perpetual futures allow traders to speculate on asset prices, often with leverage, without owning the underlying asset, and they do not expire. Hyperliquid is a major platform for trading these derivatives and has faced regulatory scrutiny. This case marks an instance where prosecutors are utilizing the Commodity Exchange Act for alleged insider trading involving derivatives, rather than pursuing securities fraud charges. Robinhood has reportedly cooperated with the investigation. If convicted, Chai and Xiang face a maximum of 10 years for commodities fraud and 20 years for wire fraud.