Two Robinhood engineers charged with insider trading on Hyperliquid perpetuals
Two Robinhood engineers charged over Hyperliquid trades made before listing announcements
Federal prosecutors in New York have charged two Robinhood engineers with using confidential company information to trade perpetual futures on Hyperliquid, a decentralized crypto trading platform. The engineers, Hefu Chai, 36, and Huaisong Xiang, 30, are accused of buying perpetual futures linked to crypto tokens before Robinhood publicly announced that those tokens would be listed on Robinhood Crypto, according to Jamie McDonald, U.S. Attorney for the Southern District of New York.
Prosecutors allege the trades took place between 2025 and 2026. Each engineer is said to have earned more than $50,000 from the activity. If convicted, both face up to 10 years in prison on charges of commodities fraud and wire fraud.
What prosecutors say the engineers did
- Chai allegedly traded ahead of at least 10 Robinhood listing announcements.
- Xiang allegedly traded ahead of at least 11 listing announcements.
- Both were designated "Coin Aware Individuals" at Robinhood, a group with access to a private Slack channel containing information about planned listings.
- Robinhood's policy barred these employees from trading the tokens on any platform before, and for 24 hours after, a public listing announcement.
How the trades were placed on Hyperliquid
Perpetual futures, often called perpetuals, are a type of derivative product. Derivatives are financial contracts whose value comes from an underlying asset, in this case a crypto token. Perpetuals let traders bet on price movements without owning the token itself, and unlike traditional futures, they do not have an expiration date. According to prosecutors, the engineers used these products on Hyperliquid to take positions before the listing news became public, then closed or adjusted those positions once the announcement was made.
Why prosecutors say the case matters
The charges show that trading derivatives on decentralized platforms is not outside the reach of federal fraud laws. McDonald said in a statement that misappropriating confidential information to trade in derivatives markets for personal benefit is illegal. Prosecutors are treating the alleged activity the same way they would treat insider trading on traditional markets.
Robinhood's response
A Robinhood spokesperson said the company "takes market integrity seriously and has zero tolerance for insider trading." According to the statement, Robinhood investigated the matter internally and reported it to law enforcement and regulators, and is cooperating with the ongoing investigations.
What is confirmed and what remains unclear
Confirmed by the charging documents and statements from the U.S. Attorney's office: the identities of the two engineers, the charges they face, the allegation that they were members of the "Coin Aware Individuals" group, the number of listing announcements they allegedly traded ahead of, and the approximate profit figures.
Still unclear from the available information: the specific tokens involved, the exact dates of each alleged trade, and whether either engineer has entered a plea. Court proceedings have not been detailed in the public filings referenced.