Two Former Robinhood Engineers Charged in Crypto Insider‑Trading Scheme Over Pre‑Listing Trades

Federal prosecutors have charged two former Robinhood engineers with trading crypto ahead of the company's own token listings. Hefu Chai, 36, of Menlo Park, California, and Huaisong "Jerry" Xiang, 30, of Jersey City, New Jersey, each face one count of violating the Commodity Exchange Act, which carries a maximum of 10 years, and one count of wire fraud, which carries a maximum of 20 years. The case was brought by the U.S. Attorney's Office for the Southern District of New York and announced on September 15.

The alleged mechanics are specific. Both men had access to a private internal Slack channel carrying advance word of planned listings, and both were internally designated "Coin Aware Individuals," a status that formally barred them from trading tokens Robinhood was about to list. Prosecutors say they instead opened long positions in perpetual futures on Hyperliquid, a decentralized derivatives exchange outside Robinhood's surveillance, and closed them after the listing announcement moved the price. Chai is alleged to have traded ahead of at least 10 listing announcements and Xiang ahead of at least 11, between March 2025 and February 2026, with each profiting more than $50,000.

Robinhood itself is not accused of wrongdoing. The company said it "takes market integrity seriously and has zero tolerance for insider trading," adding that it has insider-trading policies covering new crypto listings and that it "immediately investigated and reported this matter to law enforcement and regulators." On the facts as charged, the internal controls worked in the sense that the conduct was detected and referred, though only after a reported eleven-month run.

HOOD closed down 5.5% at $104.42 on the day, per SentiSense price data, even as social sentiment on the name stayed positive, a divergence worth noting rather than over-reading. The structural question the case raises is venue: a listings desk can police trading on its own platform, but positions taken on a decentralized exchange sit outside that view entirely. That gap, rather than the dollar amounts involved here, is what could draw broader regulatory attention to how brokerages control pre-listing information. Note that the Justice Department's own release could not be retrieved directly, so the charging details above rest on contemporaneous reporting from Forbes, CoinDesk and Bloomberg.