Two engineers at Robinhood have been charged with federal crimes for allegedly using confidential information about upcoming cryptocurrency listings to place trades in perpetual futures on Hyperliquid, a decentralized derivatives exchange. Prosecutors say the alleged scheme netted the pair a combined total of more than $100,000. The case places on-chain derivatives squarely at the center of U.S. fraud enforcement.

Engineers Allegedly Traded Ahead of Robinhood Listings

The U.S. Attorney's Office for the Southern District of New York unsealed criminal complaints against Hefu Chai, 36, and Huaisong Xiang, 30, on September 15, according to a press release from the office. Both men worked as engineers at Robinhood and allegedly had access to nonpublic information about which cryptocurrencies the company planned to add to Robinhood Crypto.

Listing decisions are among a retail brokerage's most closely guarded internal data points, since a public announcement that a token will be supported can influence trading activity across the market. According to the complaints, the two men used that information on multiple occasions during the 2025–2026 period to place ongoing futures trades on Hyperliquid, long before Robinhood went public with its own announcements of the corresponding token listings.

The alleged plan did not call for the pair to purchase the underlying cryptocurrencies. Instead, they took leveraged positions in perpetuals, hoping to profit from the price movements that followed Robinhood's announcements. Prosecutors say the trades netted each defendant more than $50,000. The public complaints do not specify which cryptocurrencies were involved.

Hyperliquid Served as the Trading Venue

Hyperliquid is a decentralized derivatives exchange that provides perpetual futures tied to cryptocurrencies and other assets. These contracts have no traditional expiration date, meaning traders can hold positions for as long as they like, while funding payments tend to keep the price of the contracts roughly in line with the underlying market.

Leverage lets traders control positions larger than the capital they post up front, magnifying the effect of any price move. That setup gave the alleged traders a way to speculate on Robinhood's listing announcements without owning the physical tokens themselves. The Department of Justice case is significant because the alleged conduct took place through a decentralized trading platform rather than a traditional venue, putting on-chain derivatives at the center of U.S. fraud enforcement.

"Corporate insiders can't evade the securities and commodity laws by trading perpetual futures or other related financial vehicles," U.S. Attorney Jamie McDonald said.

Fraud Charges Could Carry Up to 30 Years

Chai and Xiang each face one count of commodities fraud and one count of wire fraud. According to the DOJ, the maximum prison term for the Commodity Exchange Act charge is 10 years, while wire fraud carries up to 20 years. Those figures are statutory maximums and do not represent expectations of what sentences the courts may ultimately impose.

The FBI said it investigated allegations that the engineers used sensitive business data they had gathered through their jobs. Federal prosecutors say Robinhood actively assisted with the investigation. The case is being investigated by the Securities and Commodities Fraud Task Force in the U.S. Southern District of New York.

Because the public complaints do not identify the tokens tied to the alleged trades, subsequent court filings could shed light on that detail as the case moves forward. The charges also raise a major question for enforcement involving crypto exchanges: can the decentralized nature of these platforms be used to avoid U.S. commodities and fraud laws? In this case, it is not Hyperliquid itself that is the target, but the alleged use of confidential information. The exchange has not been charged, and under U.S. law, Chai and Xiang are presumed innocent until proven guilty.