U.S. prosecutors allege two engineers used confidential Robinhood token listing data to front-run announcements using Hyperliquid perpetual futures.

• Federal prosecutors charged Robinhood engineers Hefu Chai and Huaisong Xiang with commodities and wire fraud, alleging they used confidential information about planned crypto listings to trade perpetual futures on Hyperliquid.
• Prosecutors said Chai traded before at least 10 listing announcements and Xiang before at least 11, with each earning more than $50,000 between 2025 and 2026.
• The charges show that trading derivatives on decentralized platforms remains subject to federal fraud laws, and each defendant could face up to 10 years in prison if convicted.

“Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal,” McDonald said in a statement on Tuesday. “That is exactly what we allege Hefu Chai and Huaisong Xiang have done.”

The case puts trading on decentralized derivatives platforms within the same enforcement framework prosecutors use for other trading based on confidential corporate information. The use of perpetual futures did not shield the alleged trades from commodities and wire-fraud laws, prosecutors said.

McDonald alleges that between 2025 and 2026, Chai, 36, and Xiang, 30, bought perpetual futures linked to crypto tokens on Hyperliquid on several occasions in advance of the trading platform’s public announcements that the underlying assets would be listed on Robinhood Crypto. They each allegedly profited more than $50,000 from the trades, the statement said. If found guilty, they could face up to 10 years in prison.

Robinhood takes market integrity seriously and has zero tolerance for insider trading,” a Robinhood spokesperson said in an email statement. “We immediately investigated and reported this matter to law enforcement and regulators, and will continue to cooperate with their investigations.”

The filing against Chai and the one against Xiang claim the two were designated “Coin Aware Individuals,” a group with access to a private Slack channel containing information about planned listings. Robinhood’s policy barred those employees from trading the tokens on any platform before, and for 24 hours after, a public listing announcement.

Perpetuals are derivative products that allow investors to take positions on the price movements of an underlying digital asset without owning the asset itself. Unlike traditional futures contracts, perpetuals do not expire and can be maintained indefinitely, and traders make or receive periodic funding payments to keep their positions open.

The Chai complaint alleges he traded ahead of at least 10 Robinhood listing announcements. The Xiang complaint alleges he did so on at least 11 occasions.

“Hefu Chai and Huaisong Xiang are charged with commodities fraud and wire fraud for allegedly exploiting confidential business information taken from their employer to trade perpetual futures,” said James C. Barnacle Jr., FBI assistant director in charge.

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