Robinhood Engineers Face Charges Over Hyperliquid Trades
Two former engineers at Robinhood have been charged with commodities fraud and wire fraud for allegedly using confidential information to buy perpetual futures on Hyperliquid before the company announced new token listings.
Hefu Chai, 36, and Huaisong 'Jerry' Xiang, 30, worked on Robinhood's crypto-listing process. According to prosecutors, access to upcoming listings was limited to 'Coin Aware Individuals' in a private Slack channel, but the defendants allegedly traded ahead of at least 10 announcements.
The trades were placed through wallets linked to an exchange account in Chai's name on Hyperliquid, a decentralized derivatives exchange. Prosecutors argue that taking confidential information from an employer and using it in crypto derivatives can support commodities-fraud and wire-fraud charges even when the trades occur away from the employer's platform.
Robinhood reported $100 million of cryptocurrency transaction revenue in the second quarter, down 38% from a year earlier. The company is cooperating with law enforcement and regulators, but the real question is whether its employees can be trusted to keep confidential information private.