Federal prosecutors in New York have charged two former Robinhood engineers with commodities fraud and wire fraud for allegedly exploiting nonpublic information about upcoming cryptocurrency listings to generate trading profits on a decentralized derivatives platform.

U.S. Attorney Jamie McDonald for the Southern District of New York and FBI Assistant Director in Charge James C. Barnacle Jr. announced the charges against Hefu Chai, 36, of Menlo Park, California, and Huaisong “Jerry” Xiang, 30, of Jersey City, New Jersey. The complaints, unsealed on September 15, 2026, allege the pair repeatedly purchased perpetual futures contracts on Hyperliquid linked to tokens that Robinhood Crypto planned to list, acting on material nonpublic information they obtained through their roles at the company.

Access to Confidential Listing Information

Both men worked as engineers at Robinhood and were designated “Coin Aware Individuals.” This status granted them access to a private Slack channel that contained details about planned cryptocurrency listings and their expected announcement dates on Robinhood Crypto, the company’s digital asset trading platform.

Chai served as a technical lead responsible for new digital-asset listings from approximately 2021 until May 2026. Xiang worked as a software engineer involved in crypto listings from around 2024 until September 2026. Robinhood’s internal policy prohibited members of this group from trading the relevant tokens on Robinhood or any other platform in the 24 hours before or after a public listing or delisting announcement.

Prosecutors allege that between 2025 and 2026 the two men repeatedly bought long positions in Hyperliquid perpetual futures tied to specific tokens before Robinhood publicly announced the listings. After the announcements drove up the prices of those tokens, they closed the positions for profit. Each is accused of earning more than $50,000 from the activity.

Scope of the Alleged Trades

According to the complaints, Chai traded ahead of at least 10 listing announcements. The tokens involved included Cat in a Dogs World (MEW),Moo Deng (MOODENG),Aster (ASTER),Plasma (XPL),Hyperliquid (HYPE),Ethena (ENA) and Aerodrome Finance (AERO).

Xiang is alleged to have begun trading Popcat (POPCAT) perpetuals in March 2025 and to have traded ahead of at least 11 listing announcements in total. Hyperliquid’s perpetual futures allow traders to take leveraged positions on an asset’s price without owning the underlying token and without a fixed expiration date, provided funding payments keep the contract aligned with the spot market.

Legal Framework and Potential Penalties

Each defendant faces one count of violating the Commodity Exchange Act, which carries a maximum prison sentence of 10 years, and one count of wire fraud, which carries a maximum of 20 years. The charges are accusations only; both men are presumed innocent unless and until proven guilty.

Prosecutors emphasized that the use of a decentralized derivatives venue does not remove the conduct from the reach of federal fraud statutes. The case applies commodities fraud and wire fraud theories to trading based on misappropriated corporate information rather than traditional securities fraud claims centered on the tokens themselves.

Robinhood stated that it takes market integrity seriously and has zero tolerance for insider trading. The company said it immediately investigated the matter, reported it to law enforcement and regulators, and continues to cooperate with the investigations. McDonald also thanked Robinhood for its assistance.

Chai was scheduled to be presented in the Northern District of California, while Xiang was to appear before U.S. Magistrate Judge Ona T. Wang in New York. The case is being handled by the Securities and Commodities Fraud Task Force of the U.S. Attorney’s Office for the Southern District of New York.