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Crypto · updated 45m ago · 2 min read
U.S. Prosecutors Charge Robinhood Engineers Hefu Chai And Huaisong Xiang Over Hyperliquid Trades
Two former Robinhood engineers Hefu Chai and Huaisong Xiang charged with commodities and wire fraud. They allegedly used confidential listing information to trade Hyperliquid perpetual futures.
11 outlets, one story, no spin found.
9 of 10 outlets skipped it: disruption Banking says the alleged edge was access to a large retail platform..
Charges Over Listing Trades
U.S. prosecutors charged two former Robinhood engineers, Hefu Chai and Huaisong “Jerry” Xiang, with commodities fraud and wire fraud over alleged pre-listing crypto trades tied to Hyperliquid perpetuals.
“Two Robinhood engineers charged with insider trading using Hyperliquid perpetuals”
CoinDesk
Prosecutors allege the pair used confidential Robinhood Crypto listing information to buy perpetual futures on Hyperliquid before public announcements, and that each earned more than $50,000 between 2025 and 2026.
The case centers on Robinhood’s internal access controls, with prosecutors saying the engineers were designated “Coin Aware Individuals” and that the information they allegedly used came from a private Slack channel.
CoinDesk reported that prosecutors said Chai traded before at least 10 listing announcements and Xiang before at least 11, with each earning more than $50,000 between 2025 and 2026.
In the same filings, prosecutors said the use of perpetual futures did not shield the alleged trades from commodities and wire-fraud laws, and each defendant could face up to 10 years in prison if convicted.
Prosecutors and Company Response
U.S.Attorney Jamie McDonald framed the alleged conduct as illegal misappropriation, saying: “Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal.”
In a statement, Robinhood said it has “zero tolerance for insider trading,” and that it “immediately investigated and reported this matter to law enforcement and regulators.”
Disruption Banking reported that Chai, 36, of Menlo Park, and Xiang, 30, of Jersey City, were engineers at Robinhood and were slated to appear in court, with Xiang due before Magistrate Judge Ona T.Wang in Manhattan.
The sameto 10 years, while wire fraud carries up to 20 years, and it identified Assistant U.S.Attorney Alexandra N.Rothman as the prosecutor
CoinDesk added that the charges allege Chai and Xiang bought perpetual futures linked to crypto tokens on Hyperliquid in advance of Robinhood Crypto public announcements that the underlying assets would be listed.
Court, Penalties, and What’s at Risk
Prosecutors allege the scheme depended on timing and access, with Robinhood placing Chai and Xiang in a restricted group and prosecutors saying they traded anyway before and around listing announcements.
“Coin Aware staff were not to trade the relevant crypto-asset on Robinhood, or on another platform”
Disruption Banking
Disruption Banking said the blackout covered trading on Robinhood or another platform before a listing or delisting announcement and for 24 hours after, while the complaints allege the pair opened perpetual futures positions before Robinhood told the public and closed them after listings became public.
CoinDesk reported that the filing against Chai and the one against Xiang claim the two were designated “Coin Aware Individuals,” a group with access to a private Slack channel containing information about planned listings.
If convicted, the legal exposure described in the coverage includes up to 10 years for commodities fraud and up to 20 years for wire fraud, with the charges remaining allegations and both defendants presumed innocent unless convicted.
The case also places decentralized derivatives trading under the same enforcement framework prosecutors use for other trading based on confidential corporate information, with CoinDesk saying the use of perpetual futures did not shield the alleged trades from commodities and wire-fraud laws.
Source: newscord.org