DOJ Charges Robinhood Engineers With Fraud Over Hyperliquid Perpetual Trades

Two Robinhood engineers face federal fraud charges for allegedly using confidential cryptocurrency listing information to make profitable perpetual futures trades on Hyperliquid.

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Robinhood Engineers Face Federal Fraud Charges

Federal prosecutors charged Hefu Chai and Huaisong Xiang, also known as “Jerry Xiang,” with commodities fraud and wire fraud. Defendants were both engineers at Robinhood Markets at the time of the alleged trading activity.

They held the power of access to confidential information regarding planned cryptocurrency listings on Robinhood Crypto. Prosecutors say the engineers were aware of which cryptocurrencies Robinhood intended to support before it publicly announced them.

Between 2025 and 2026, Chai and Xiang allegedly used that information to trade perpetual futures on Hyperliquid. They reportedly opened positions linked to cryptocurrencies before Robinhood announced support for those tokens.

Prosecutors claim prices moved after several listing announcements, allowing the engineers to profit from their positions. All the defendants allegedly made over $50,000 in trades related to Robinhood’s private listing efforts.

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Prosecutors Detail Hyperliquid Perpetual Trades

Hyperliquid has a decentralized derivatives exchange (DEX) offering perpetual futures based on cryptocurrencies and other underlying assets. These products give traders a chance to wager on price changes without having to buy and possess the underlying asset.

Unlike traditional futures contracts, perpetual futures do not have fixed expiration dates. Traders can maintain positions while making or receiving funding payments that help track underlying market prices.

According to the complaints, Chai and Xiang repeatedly bought perpetual futures contracts before Robinhood announced new cryptocurrency listings.The complaints state that Chai and Xiang repeatedly bought perpetual futures contracts prior to a new announcement by Robinhood of cryptocurrencies that would be listed.

Prosecutors say both engineers possessed material nonpublic information when they placed those trades.

U.S. Attorney Jamie McDonald said, “Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal.”

Both defendants allegedly violated their obligations to safeguard confidential information of Robinhood. He also said derivatives products do not provide a way around securities and commodities laws.

FBI Joins Investigation Into Alleged Trading Scheme

FBI Assistant Director James C. Barnacle Jr. said the defendants allegedly exploited sensitive information obtained through their employment. A federal officer, then, filed commodities fraud and wire fraud charges against both engineers.

“These charges make clear the FBI with its partners will act,” Barnacle said while addressing alleged misuse of corporate information.

Authorities unsealed the complaints and Chai was set to appear in the Northern District of California. Xiang was scheduled to appear before U.S. Magistrate Judge Ona T. Wang.

The criminal complaints include allegations that have to be proven in court. Chai and Xiang are still presumed innocent until prosecutors establish their guilt beyond a reasonable doubt.