DOJ charges Robinhood former engineers with front-running crypto listings on Hyperliquid

Two former Robinhood engineers have been accused of front-running crypto token listings on the brokerage platform.

The U.S. Department of Justice charged Hefu Chai and Huaisong Xiang with commodities fraud and wire fraud, alleging they misappropriated confidential information about upcoming cryptocurrency listings on Robinhood Crypto and used it to trade perpetual futures on Hyperliquid.

According to prosecutors, the two repeatedly took positions in tokens ahead of Robinhood's public listing announcements between 2025 and 2026, with each allegedly profiting more than $50,000.

"Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal," said Jamie McDonald, United States Attorney for the Southern District of New York, in a release. "Today’s charges make clear that corporate insiders cannot evade the securities and commodities laws by trading based on misappropriated information in derivatives like perpetual futures, tokenized securities, or other similar financial instruments."

Chai, 36, and Xiang, 30, each face one count under the Commodity Exchange Act, which carries a maximum sentence of 10 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison.

In a follow-up statement, a Robinhood spokesperson said that "Robinhood takes market integrity seriously and has zero tolerance for insider trading. We have robust insider trading policies and procedures in place, including for new crypto listings. We immediately investigated and reported this matter to law enforcement and regulators, and will continue to cooperate with the investigations."

Federal precedent

There is a federal precedent for prosecuting someone who uses confidential information from a crypto company to trade ahead of an anticipated market-moving event. In 2022, the Justice Department charged three people in what it called the first cryptocurrency insider-trading tipping scheme, involving advance knowledge of Coinbase token listings.

Unlike that case, the Robinhood employees are accused of using confidential listing information to trade perpetual futures rather than the underlying tokens themselves.

Of note, a Hyperliquid trader last October opened BTC and ETH shorts shortly before President Donald Trump announced 100% tariffs on China. The trader ultimately made roughly $150 million to $ 200 million. The trader was subsequently linked to former BitForex CEO Garrett Jin, who denied having insider information or connections to the Trump family.