US Indicts Ex-Robinhood Engineers for Alleged Pre-Listing Crypto Trades

U.S. prosecutors have charged two former Robinhood engineers with fraud allegations tied to cryptocurrency token listings, accusing them of using confidential internal information to profit from perpetual futures trades on Hyperliquid.

According to the U.S. Department of Justice (DOJ), Hefu Chai and Huaisong “Jerry” Xiang bought perpetual contracts connected to tokens shortly before those assets debuted on Robinhood Crypto. The DOJ alleges each defendant earned more than $50,000 from the trades between 2025 and 2026.

Key takeaways

• The DOJ alleges Robinhood engineers accessed nonpublic listing plans via a private Slack channel and traded perpetual futures on Hyperliquid ahead of announcements.
• Prosecutors say the alleged strategy relied on opening long positions before tokens listed and closing after their value rose following debut.
• The charges extend insider-trading-style conduct into decentralized derivatives markets, rather than spot token purchases alone.
• Prosecutors argue that company “insider” restrictions do not prevent liability if misappropriated information is used to trade derivatives.
• Both defendants are presumed innocent, and the charges remain allegations.

DOJ alleges inside information drove pre-listing perpetual trades

In a press release describing the case, the DOJ said Chai and Xiang traded based on upcoming listing information they allegedly obtained through Robinhood’s internal systems. Prosecutors allege that each used the information to buy perpetual contracts linked to specific tokens before those tokens were announced as listings on Robinhood Crypto.

After the tokens’ debut, the DOJ claims the defendants closed their positions at higher prices. The agency’s filings state that the alleged profits for each defendant exceeded $50,000.

The alleged mechanism matters for market structure: perpetual futures allow traders to take leveraged exposure without necessarily buying the underlying asset directly. The DOJ’s theory therefore targets a broader category of “derivatives” behavior than cases limited to spot markets.

Robinhood roles, access controls, and alleged policy breaches

The DOJ complaints say Chai worked at Robinhood from around 2021 until May 2026 and served as a technical lead tied to new digital-asset listings. Xiang, prosecutors allege, worked at Robinhood from around 2024 until September 2026 and was a software engineer involved in crypto listings.

According to the DOJ, Robinhood designated both men as “Coin Aware Individuals,” granting them access to a private Slack channel that contained planned listing dates. The DOJ also alleges the engineers traded in a way that violated a company policy restricting members of that group from trading on Robinhood—or any other platform—within 24 hours before or after a listing or delisting announcement.

Prosecutors further allege Chai traded perpetuals ahead of at least 10 listing announcements involving tokens including Cat in a dogs world (MEW), Moo Deng (MOODENG), Aster (ASTER), Plasma (XPL), Hyperliquid (HYPE), Ethena (ENA), and Aerodrome Finance (AERO). For Xiang, the DOJ says the first alleged pre-listing trade involved Popcat (POPCAT) perpetuals in March 2025, followed by trades ahead of at least 10 other listing announcements.

Why prosecutors frame it as law-breaking—then link it to past insider cases

The DOJ’s allegations echo the logic behind earlier U.S. insider-trading prosecutions involving crypto listings. Earlier coverage by Cointelegraph highlighted the 2023 Coinbase insider-trading case, in which a former employee used confidential information to profit from new token listings. That matter involved direct purchases of the underlying asset rather than futures exposure.

In this Robinhood case, the DOJ’s theory extends the alleged misconduct into perpetual derivatives markets. Prosecutors appear to be drawing attention to the fact that insider-style profits can be pursued through leveraged instruments, not only spot buys, and that the legal risk persists even when the trading venue differs from where the listing decision is made.

U.S. Attorney Jamie McDonald said corporate insiders cannot avoid securities and commodities laws by trading misappropriated information through perpetual futures, tokenized securities, or similar instruments.

Charges, potential penalties, and what remains unresolved

Each defendant faces one count of violating the Commodity Exchange Act and one count of wire fraud. The DOJ stated that the Commodity Exchange Act count carries a maximum prison sentence of 10 years, while the wire fraud count carries a maximum of 20 years.

As with all criminal cases, the charges are allegations. Chai and Xiang are presumed innocent unless convicted.

Robinhood did not immediately respond to Cointelegraph’s request for comment by the time of publication.

For traders and builders, the main thing to watch next is how courts treat the DOJ’s attempt to connect insider information to profits generated specifically through perpetual futures on platforms outside the company that made the listing decision. The outcome could influence how aggressively prosecutors pursue “listing-related” conduct across both centralized listings and decentralized derivative trading venues.