DOJ Charges Two Robinhood Engineers in Crypto Listing Scheme — SkimNews
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- Hefu Chai and Huaisong "Jerry" Xiang, both former Robinhood engineers, each face one count of commodities fraud and one count of wire fraud after allegedly buying perpetual futures tied to upcoming Robinhood Crypto token listings before public announcements between 2025 and 2026.
- Each defendant allegedly earned more than $50,000 from the scheme by trading perpetual futures on decentralized exchange Hyperliquid before the token listings were announced.
- U.S. Attorney Jamie McDonald said the charges make clear "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."
- Prosecutors are pursuing the case under the Commodity Exchange Act rather than securities fraud charges — a legal lane that targets derivatives on decentralized platforms where insider-trading enforcement has historically been thin.
- Robinhood said it "has zero tolerance for insider trading," confirmed it immediately investigated the matter, and reported it to law enforcement; the company also cooperated with the federal probe.
- If convicted, Chai and Xiang face up to 10 years on the commodities fraud count and up to 20 years on the wire fraud count — a combined maximum of 30 years each.
- The charges echo the earlier Coinbase product-manager case against Ishan Wahi, who pleaded guilty to wire fraud conspiracy for sharing confidential token-listing information.
Why it matters: The DOJ is using the Commodity Exchange Act to charge insider trading in perpetuals on a DEX — not securities fraud — opening a new enforcement lane aimed at crypto-native venues. With Robinhood now scrutinized over its recently expanded crypto perpetual-futures business and each engineer facing up to 30 years combined, the case sets a deterrent precedent for how trading desks handle nonpublic listing data across the industry.
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