Federal prosecutors have unsealed criminal complaints against two Robinhood Markets engineers, accusing the pair of using confidential information about upcoming cryptocurrency listings to trade perpetual futures contracts on Hyperliquid, a decentralized derivatives exchange, before Robinhood publicly announced the tokens. Each defendant is alleged to have cleared more than $50,000 from the trades. Both men are presumed innocent unless proven guilty.
The United States Attorney’s Office for the Southern District of New York (SDNY) named the defendants as Hefu Chai, 36, of Menlo Park, California, and Huaisong Xiang, 30, also known as Jerry Xiang, of Jersey City, New Jersey. The office made the charges public on Tuesday, September 15, 2026.
Both men worked as engineers at Robinhood and, in that capacity, had access to nonpublic information on whether and when the company would add new tokens to Robinhood Crypto, the firm’s digital asset trading platform.
What the complaints allege
According to the complaint against Chai and the complaint against Xiang, SDNY complaints unsealed with the September 15, 2026 press release, the two engineers repeatedly bought Hyperliquid perpetual futures tied to specific tokens cryptocurrency tokens between 2025 and 2026 while holding internal knowledge that Robinhood was about to list those tokens. Each trade, prosecutors argue, was placed in breach of a duty the engineers owed their employer to keep listing decisions confidential. The public release does not name the tokens.
Perpetual futures, often shortened to perps, are derivative contracts that let a trader take a leveraged position on an asset’s price without owning the underlying token. Unlike traditional futures, they never expire. Traders instead pay or receive small funding payments at fixed intervals to keep the contract price aligned with the spot market, and positions can be closed at any time to lock in a gain or loss.
Hyperliquid is a decentralized exchange whose order book, open positions, and trade timestamps are all recorded on-chain. That transparency means any observer can inspect trading activity in near real time, and it is the same transparency that allowed independent analysts to flag suspicious flow well before Tuesday’s unsealing.
Court appearances and possible sentences
Chai is scheduled to be presented in the Northern District of California. Xiang will appear in Manhattan before United States Magistrate Judge Ona T. Wang.
Each defendant faces one count of violating the Commodity Exchange Act, which carries a maximum sentence of 10 years in prison, and one count of wire fraud, which carries a maximum of 20 years. The SDNY release stressed that statutory maximums are set by Congress, and that any actual sentence would be determined by a judge.
The prosecution is being handled by the SDNY’s Securities and Commodities Fraud Task Force, with Assistant United States Attorney Alexandra N. Rothman assigned to the case. United States Attorney Jamie McDonald credited the Federal Bureau of Investigation (FBI) with the underlying investigation and thanked Robinhood for cooperating. FBI New York Field Office Assistant Director in Charge James C. Barnacle Jr. is named on the release alongside McDonald.
The legal argument, and why prosecutors closed the “decentralized exchange” door
McDonald used the announcement to close off a line of argument sometimes heard around on-chain derivatives, that trading on a decentralized venue somehow places a person outside United States commodities law. According to the prosecutor, corporate insiders cannot sidestep securities and commodities rules by trading on misappropriated information in derivatives such as perpetual futures or tokenized securities.
Barnacle added that the two engineers are accused of exploiting confidential business information taken from their employer to trade perpetual futures.
The theory sitting behind those statements is straightforward. A listing calendar held inside a United States brokerage counts as material nonpublic information. The duty of confidentiality that comes with it does not disappear because a trader routes the order through an on-chain venue rather than a regulated exchange.
The public on-chain trail
Because Hyperliquid records positions and timestamps on-chain, some of the flagged activity had already surfaced in public analysis months before Tuesday’s charges. Independent on-chain researchers had noted wallets opening Hyperliquid perpetual positions shortly ahead of Robinhood listing announcements. One closely watched wallet cluster was separately flagged for a short position placed hours before Robinhood released its first-quarter 2026 earnings.
The Department of Justice (DOJ) has not, in its public release, named the tokens involved or matched any specific wallet addresses to Chai or Xiang. The complaints say only that each engineer bought perpetuals linked to tokens Robinhood later listed, and that each made more than $50,000 in the process. Prior open-source analysis and the government’s charging papers therefore sit side by side in the same news cycle without being the same body of evidence.
Where the case fits in SDNY’s 2026 enforcement pattern
The Robinhood matter continues a pattern SDNY has established through 2026 of treating on-chain markets as ordinary commodities venues once the trading edge is derived from stolen information. Earlier this year the same office charged a Google engineer over Polymarket prediction contracts tied to confidential search-trend data, and separately charged an Army soldier over trades made on classified information.
The dollar figures alleged in the Robinhood matter are smaller than in those cases. The doctrinal reach is broader, extending the misappropriation theory from prediction contracts to decentralized perpetual futures on an offshore, on-chain venue.
What Robinhood and Hyperliquid are in this story
Robinhood is identified in the complaints as the source of the confidential listing schedule. It is not charged, and prosecutors credited the firm for cooperating with investigators.
Hyperliquid, the alleged execution venue, is also not charged. It has grown into one of the largest on-chain perpetual futures markets in 2026, with Crypto Times having reported on Coinbase taking over Hyperliquid’s USDC treasury deployment, the exchange’s HIP-3 permissioned markets upgrade, real-world asset volume overtaking crypto trading on its HIP-3 order books, and its policy arm’s fight with CME Group over a Commodity Futures Trading Commission (CFTC) proceeding.
Robinhood separately operates Robinhood Chain, an Arbitrum Orbit layer-2 network that crossed $100 million in total value locked (TVL) within a week of launch. That chain is a separate product from the listing information that sits at the center of Tuesday’s complaints.
The charges are accusations. Chai and Xiang are presumed innocent unless and until proven guilty in a court of law.
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