Robinhood Slumps as Prosecutors Charge Former Engineers Over Crypto Trades

Robinhood Markets (NASDAQ:HOOD) stock plummeted 5% to $105.1 in Wednesday trading after federal prosecutors in Manhattan disclosed criminal charges tied to trading in crypto derivatives ahead of Robinhood listing announcements.

The unusual setup is that the asset the two brokerages sit exposed to isn't doing much today. The iShares Bitcoin Trust ETF (NASDAQ:IBIT) is down 0.6% to $42.86, while the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 0.4% to $760.33.

Prosecutors allege that two former Robinhood engineers, Hefu Chai and Huaisong Xiang, each bought perpetual futures tokens on Hyperliquid, a decentralized exchange, ahead of Robinhood’s public announcements that the underlying tokens would be listed on Robinhood Crypto. Each allegedly profited more than $50,000.

The charges name the two individuals rather than Robinhood itself, which isn't accused of wrongdoing in the announcement. The market is repricing the reputational and regulatory exposure that comes with running a crypto listings business.