Former Robinhood Crypto engineers Hefu Chai, 36, and Huaisong “Jerry” Xiang, 30, have been charged with commodities fraud and wire fraud over alleged trades made ahead of Robinhood’s cryptocurrency listing announcements.

The U.S. Attorney’s Office for the Southern District of New York alleges that the two men used confidential information about upcoming token listings to trade related perpetual futures on Hyperliquid before the information was released publicly.

Prosecutors allege that each defendant made more than $50,000 from the trades between 2025 and 2026.

The case is notable because the alleged activity took place in decentralized derivatives markets. Rather than buying the tokens directly on a centralized exchange, the defendants allegedly used perpetual futures contracts to gain exposure before the listings were announced.

What Prosecutors Allege

The charges were announced on Sept. 15, 2026. Chai is from Menlo Park, California, while Xiang is from Jersey City, New Jersey.

According to the allegations, both engineers had access to nonpublic details about Robinhood’s planned cryptocurrency listings through their employment. Prosecutors say they used that information to establish positions on Hyperliquid before the corresponding listings became public.

The DOJ alleges that doing so violated their confidentiality obligations and generated personal financial gains. U.S. Attorney Jamie McDonald said insiders cannot avoid fraud laws by using derivative contracts instead of directly purchasing the underlying assets.

The commodities fraud charges carry maximum prison terms of 10 years, while the wire fraud charges can carry sentences of up to 20 years.

Robinhood said it is committed to protecting market integrity, reported the issue to authorities and is cooperating with the investigation.

Role of Hyperliquid Perpetuals

Perpetual futures allow traders to speculate on cryptocurrency prices without taking ownership of the underlying tokens. Unlike traditional futures, they have no expiration date and use funding payments to maintain a close relationship with spot prices.

The structure can provide traders with a way to position ahead of major announcements without purchasing, transferring or holding the actual cryptocurrency.

Prosecutors are relying on the Commodity Exchange Act and federal wire fraud statutes rather than securities-fraud laws. The approach allows the case to focus on alleged fraudulent trading in cryptocurrency derivatives without requiring the government to first establish whether the underlying tokens are securities.

The allegations also bear similarities to the earlier case involving former Coinbase employee Ishan Wahi, who was prosecuted over the alleged misuse of confidential information concerning upcoming token listings.

Hyperliquid has emerged as a major decentralized venue for perpetual futures and has faced regulatory scrutiny. The case involving the former Robinhood engineers adds another criminal-law dimension to the broader examination of trading activity on decentralized derivatives platforms.

For market participants, the allegations demonstrate the potential legal exposure associated with using confidential listing information to trade crypto derivatives before announcements, including on decentralized venues.

The charges are allegations and have not been proven in court. Both Chai and Xiang are presumed innocent unless found guilty. No trial date or plea has been reported.