US DOJ Charges Robinhood Employees For Insider Trading

The US Department of Justice (DOJ) has charged two Robinhood engineers with commodities fraud and wire fraud. The brokerage employees Hefu Chai and Huaisong Xiang are facing allegations of using insider information from the platform to trade Hyperliquid perpetual futures.

According to the DOJ, the two used confidential information about upcoming crypto listings on Robinhood to trade on Hyperliquid. The activity happened between 2025 and 2026.

Robinhood Employees Could Face up to 30 Years in Prison

The DOJ claims that the employees, due to their role in Robinhood, had access to nonpublic information about Robinhood listings. It noted that through these trades, they each profited more than $50,000.

Interestingly, Chai 36 and  Xiang 30 are in two different jurisdictions, California and New Jersey, respectively. The DOJ report did not suggest any conspiracy between the two.

The employees now face one count of Commodity Exchange Act violation, which carries a maximum of 10 years’ imprisonment, and another count of wire fraud, carrying a maximum of 20 years’ imprisonment. This means they are now at risk of up to 30 years imprisonment, even though this is highly unlikely.

The DOJ statement noted that the maximum potential sentence is provided only for informational purposes, as the court will determine the sentence. Chai has appeared before the court in the Northern District of California, while Xiang has also been presented before a US magistrate judge, Ona T. Wang.

The DOJ collaborated with the FBI and Robinhood on the case.

DOJ Says Insider Trading Laws Apply to Derivatives Market

Meanwhile, the DOJ has highlighted the case to show that trading on confidential information is illegal regardless of the venue. According to US Attorney for the Southern District of New York Jamie McDonald, misappropriating confidential information for personal gain is illegal.

“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,” he said.

This is not the first time federal prosecutors have pursued cases of insider trading involving cryptocurrencies. In 2022, the DOJ sued a Coinbase employee for sharing information about potential token listings with his brother and friends.

US regulators have also gone after a few individuals for using insider information to trade on prediction markets. A member of the US armed forces was charged a few months ago for using classified information to profit on Polymarket.

The Commodity Futures Trading Commission (CFTC) also ordered Gabriel Perez, a teleprompter operator for President Donald Trump, to pay over $172,000 in civil penalties and forfeitures. Perez had used information about Trump speeches to trade on Kalshi mention markets, a decision that also cost him his job and a three-year ban from the prediction market platform.