The Department of Justice charged two former engineers from Robinhood Markets, Inc. (NASDAQ:HOOD) on Tuesday in connection with an alleged insider trading scheme involving cryptocurrencies.
Confidential Information Misused, Says Regulator
Hefu Chai and Huaisong Xiang have been indicted on commodities fraud and wire fraud. Prosecutors allege that the two misappropriated Robinhood’s “confidential business information” and used it to take positions in perpetual futures on Hyperliquid (CRYPTO: HYPE) ahead of public announcements.
The two former employees had access to information regarding Robinhood’s plans to support additional cryptocurrencies on its subsidiary, Robinhood Crypto.
Between 2025 and 2026, Chai and Xiang allegedly used this information to buy perpetual futures linked to those tokens, violating Robinhood’s confidentiality obligations. Each of them allegedly made over $50,000 from these trades.
Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal,” said Jamie McDonald, U.S. Attorney for the Southern District of New York.
McDonald thanked Robinhood for its cooperation with the investigation.
Robinhood didn’t immediately return Benzinga’s request for comment. A response from the Hyperliquid Policy Center is also awaited.
Insider Trading Under the Microscope
The case comes amid heightened scrutiny of insider trading used to profit from crypto-related platforms.
Earlier in May, the DOJ charged a software engineer at Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL)-owned Google with profiting over $1 million on Polygon (CRYPTO: POL)-based Polymarket by misusing confidential information.
Before that, a U.S. soldier was charged with allegedly using classified information to profit on a Polymarket bet linked to Venezuela’s ousted leader, Nicolás Maduro.
Price Action: Robinhood shares fell 1.14% in after-hours trading, according to data from Benzinga Pro. The stock closed 3.39% lower at $110.45 during Tuesday’s regular trading session. HYPE token traded 2.59% lower at $77.46 at the last check.
Robinhood Stock shows stronger price momentum across short-, medium-, and long-term horizons, according to Benzinga’s Edge Stock Rankings.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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