Two former Robinhood engineers have been charged by U.S. federal prosecutors over an alleged insider trading scheme involving Hyperliquid perpetual futures and confidential information about upcoming cryptocurrency listings. The U.S. Attorney’s Office for the Southern District of New York announced the charges on September 15, 2026, accusing Hefu Chai and Huaisong “Jerry” Xiang of commodities fraud and wire fraud.
According to prosecutors, the former Robinhood employees allegedly used nonpublic information available through their roles at Robinhood to identify cryptocurrencies that the company planned to add to Robinhood Crypto. They allegedly used that information to purchase related perpetual futures on Hyperliquid before Robinhood publicly announced the listings.
The case highlights growing scrutiny around crypto derivatives trading, decentralized exchanges and the use of confidential corporate information. Prosecutors allege that each defendant earned more than $50,000 from the trades between 2025 and 2026.
Robinhood Engineers Allegedly Traded Before Listings
Federal prosecutors allege that Chai and Xiang had access to confidential information about whether and when Robinhood planned to support additional cryptocurrencies. The information allegedly gave them advance knowledge of market moving listing announcements before those announcements reached the public.
Prosecutors say the pair repeatedly bought perpetual futures tied to cryptocurrency tokens on Hyperliquid shortly before Robinhood announced the corresponding listings. Unlike traditional futures contracts, perpetual futures do not have an expiration date and allow traders to gain exposure to an asset’s price without directly owning the underlying cryptocurrency.
The alleged strategy therefore did not require the defendants to purchase the tokens themselves. Instead, prosecutors say they used Hyperliquid derivatives to establish positions before Robinhood’s public announcements and later profited from the resulting price movements.
The allegations involve multiple trades between 2025 and 2026. CoinDesk reported that prosecutors allege Chai traded ahead of at least 10 listing announcements, while Xiang allegedly traded ahead of at least 11. Each allegedly generated more than $50,000 in profit.
U.S. Prosecutors Target Crypto Derivatives Trading
The charges are notable because the alleged trades occurred through Hyperliquid, a decentralized derivatives exchange, rather than through a traditional stock market or by directly purchasing the cryptocurrencies involved.
U.S. Attorney Jamie McDonald said the government alleges that confidential information cannot be used for personal gain simply because the resulting trades occur through derivatives. The Justice Department’s announcement specifically stated that the charges involve the alleged misuse of confidential business information to trade perpetual futures on Hyperliquid.
Chai and Xiang each face one count of commodities fraud under the Commodity Exchange Act and one count of wire fraud. The commodities-fraud charge carries a maximum sentence of 10 years in prison, while the wire fraud charge carries a maximum sentence of 20 years. Those are statutory maximums, not predictions of the sentences the defendants would receive if convicted.
The case also adds to a broader history of U.S. enforcement involving confidential cryptocurrency listing information. In the 2022 Coinbase case, federal prosecutors pursued allegations involving advance knowledge of token listings. The Robinhood case differs because prosecutors allege that the former employees traded perpetual futures rather than directly buying the underlying tokens.
Robinhood Says It Reported the Matter
Robinhood said it maintains strict policies covering insider trading and cryptocurrency listings. The company said it investigated the matter and reported it to law enforcement and regulators, while also saying it would continue cooperating with the investigations.
The allegations place additional attention on how confidential listing information can affect crypto markets, particularly perpetual futures markets where traders can take leveraged positions around anticipated price movements. The case could also attract attention across decentralized finance as U.S. authorities pursue alleged financial misconduct involving onchain and decentralized trading venues.
For Hyperliquid, the case underscores how activity on a decentralized derivatives platform can still become the subject of U.S. criminal enforcement when prosecutors allege that traders misappropriated confidential information. The Justice Department has made clear that the location or structure of the trading venue does not, by itself, prevent authorities from pursuing alleged commodities or wire fraud.
However, the charges are allegations rather than findings of guilt. The Justice Department explicitly stated that Chai and Xiang are presumed innocent unless and until proven guilty in court.
