U.S. prosecutors charged two Robinhood engineers with fraud over an alleged scheme to trade on confidential information about upcoming cryptocurrency listings.
The case centers on trades made through Hyperliquids perpetual futures market. Hefu Chai and Huaisong Xiang allegedly used nonpublic information from Robinhood Crypto to take positions in tokens before the exchange announced their listings.
Prosecutors said each engineer made more than $50,000 from the alleged trades.
Alleged Use of Confidential Data
According to the complaints, Chai and Xiang had access to confidential listing information through their engineering roles at Robinhood. Prosecutors allege they used that information to trade tokens before the listings became public.
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The trades were made through Hyperliquids perpetual futures market, which allows traders to take positions on cryptocurrency prices without owning the underlying tokens.
The charges are allegations, and both defendants are presumed innocent unless proven guilty. Chai is facing proceedings in California, while Xiang is expected to appear in federal court in Manhattan.
Potential Penalties
The Justice Department charged both men with commodities fraud and wire fraud. Commodities fraud carries a maximum sentence of 10 years in prison, while wire fraud carries a maximum of 20 years, if they are convicted.
Prosecutors alleged that the engineers used confidential information to trade ahead of public announcements.