Federal Prosecutors Charge Two Former Robinhood Engineers in Crypto Derivatives Scheme

source: FinanceFeeds

Two former software engineers at Robinhood Crypto face federal fraud charges after prosecutors alleged they exploited confidential listing information to trade perpetual futures on the decentralized exchange Hyperliquid, according to FinanceFeeds and The Block.

The Justice Department announced the charges on September 15, 2026.

Hefu Chai, 36, and Huaisong Xiang, 30, allegedly used their access to nonpublic information about upcoming Robinhood token listings to take leveraged positions in those tokens before any public announcement.

Prosecutors say both men generated more than $50,000 each in profits from the trading activity, which took place between 2025 and 2026.

The Instruments Used and Why They Matter

Rather than buying tokens directly, Chai and Xiang allegedly traded perpetual futures contracts on Hyperliquid. These derivatives provide price exposure to a token without requiring ownership of the underlying asset.

That choice of instrument gave prosecutors a different legal path: instead of arguing whether the tokens are securities, the government charged the pair under commodities law because the trades involved derivatives, a move that could have consequences for employees at other crypto firms with access to market-moving data.