US prosecutors charge former Robinhood engineers with insider trading of crypto derivatives

U.S. prosecutors have filed charges against Hefu Chai and Huaisong “Jerry” Xiang, former engineers at Robinhood, accusing them of insider trading in cryptocurrency derivative markets. The indictment alleges the pair used privileged information about upcoming token listings to open and close long positions on Hyperliquid perpetual contracts, netting more than $50,000 each between 2025 and 2026.

Alleged misconduct

According to the Department of Justice, both men had access to a private Slack channel that disclosed planned token listings on Robinhood Crypto. The channel was restricted to “Coin Aware Individuals,” a group barred from trading on Robinhood or any platform within a 24‑hour window before or after a listing announcement. Prosecutors claim the engineers leveraged this information to trade Hyperliquid perpetual futures linked to the tokens before they were listed, closing the positions after the listings caused price spikes.

Specific tokens involved

• Cat in a dogs world (MEW)
• Moo Deng (MOODENG)
• Aster (ASTER)
• Plasma (XPL)
• Hyperliquid (HYPE)
• Ethena (ENA)
• Aerodrome Finance (AERO)
• Popcat (POPCAT)

Legal implications

Each defendant faces one count of violating the Commodity Exchange Act, punishable by up to ten years in prison, and one count of wire fraud, carrying a maximum sentence of twenty years. The charges are allegations, and the defendants are presumed innocent until proven guilty.

Robinhood’s internal controls

Robinhood’s policy designated certain employees as “Coin Aware Individuals,” restricting their ability to trade around listing events. The company did not respond to requests for comment at the time of publication.

Broader context

The case mirrors a 2023 insider‑trading prosecution involving a former Coinbase employee, extending the legal scrutiny to decentralized derivative platforms. U.S. Attorney Jamie McDonald emphasized that corporate insiders cannot evade securities and commodities laws by trading misappropriated information through perpetual futures or tokenized securities.