Federal prosecutors in Manhattan charged two Robinhood engineers with commodities fraud and wire fraud on September 15, 2026, alleging the pair used confidential information about upcoming Robinhood Crypto token listings to trade perpetual futures on the Hyperliquid exchange for personal profit, according to an announcement from the U.S. Attorney’s Office for the Southern District of New York. Hefu Chai, 36, and Huaisong “Jerry” Xiang, 30, each allegedly earned more than $50,000 from the scheme between 2025 and 2026.
Confidential Listing Plans Turned Into a Trading Signal
As Robinhood engineers, Chai and Xiang could see nonpublic information about whether and when Robinhood Crypto planned to add specific cryptocurrencies, prosecutors said. Rather than keeping that knowledge inside the company, the pair allegedly crossed to Hyperliquid and repeatedly bought perpetual futures tied to those same tokens before the listings were announced publicly. Perpetual futures, or perps, let traders speculate on an asset’s price without owning it and, unlike conventional futures, do not expire. The defendants did not need to hold the underlying tokens to place the bets, prosecutors noted.
“Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal,” U.S. Attorney Jamie McDonald said in a statement. When the listings became public, prosecutors allege, the positions were already in place.
Commodities Charges, Not Securities Fraud
Prosecutors are using the Commodity Exchange Act to pursue the alleged insider trading, treating the derivatives trades as a commodities violation rather than a securities case. Chai and Xiang each face one count of commodities fraud carrying a maximum sentence of 10 years, and one count of wire fraud carrying a maximum of 20 years. Robinhood cooperated with the investigation, according to the Justice Department, and the two defendants are presumed innocent unless proven guilty.
The case echoes the earlier prosecution of a former Coinbase product manager who pleaded guilty over insider trading charges tied to confidential token-listing information, showing that listing calendars have become a recurring target for enforcement.
Hyperliquid’s Growing Regulatory Spotlight
The charges land as Hyperliquid, one of the largest venues for decentralized perpetuals trading, draws closer compliance scrutiny. Chainalysis recently added HyperEVM support for Hyperliquid compliance monitoring. The case also shows how regulators are extending insider-trading enforcement from traditional securities into crypto derivatives, where the same confidential corporate information can be turned into a leveraged trade on a separate platform from the company that generated it.
