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A Menlo Park man who worked as an engineer for Robinhood was charged Tuesday with federal fraud after prosecutors said he used confidential company information to make <a href="https://xpertsstudio.com/us-senate-to-vote-on-advancing-sweeping-cryptocurrency-bill/” title=”US Senate to vote on advancing sweeping cryptocurrency bill”>cryptocurrency trades ahead of public announcements
Hefu Chai, 36, of Menlo Park, was charged Tuesday with commodities fraud and wire fraud in connection with a scheme involving Robinhood’s planned cryptocurrency listings, according to the U.S. Attorney’s Office for the Southern District of New York.
Chai was employed as an engineer at Robinhood and had access to nonpublic information about whether and when the company would add cryptocurrencies to its trading platform, prosecutors said.
Federal prosecutors said Chai and another Robinhood engineer, Huaisong Xiang, used that information to trade perpetual futures tied to cryptocurrencies on Hyperliquid, a decentralized derivatives exchange.
According to the criminal complaint, the two men repeatedly purchased the cryptocurrency-linked derivatives before Robinhood publicly announced that the underlying tokens would be available for trading on Robinhood Crypto.
Prosecutors said the trades occurred between 2025 and 2026 and that each man made more than $50,000 from the trading.
“Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal,” said U.S. Attorney Jamie McDonald in announcing the charges. “[The] charges make clear that corporate insiders cannot evade the securities and commodities laws by trading based on misappropriated information in derivatives like perpetual futures, tokenized securities, or other similar financial instruments.”
Chai is scheduled to appear Tuesday in federal court in the Northern District of California. Xiang, 30, of Jersey City, New Jersey, is scheduled to appear in Manhattan federal court.
Both men are charged with one count of violating the Commodity Exchange Act and one count of wire fraud. The commodities fraud charge carries a maximum sentence of 10 years in prison, while wire fraud carries a maximum sentence of 20 years.
The charges are accusations, and Chai and Xiang are presumed innocent unless and until proven guilty.
The FBI investigated the case, with the prosecution being handled by the U.S. Attorney’s Office for the Southern District of New York’s Securities and Commodities Fraud Task Force.
Source: patch.com
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