On Monday, September 15, 2026, the U.S. Attorney’s Office for the Southern District of New York announced that two software engineers have been charged in federal court for allegedly orchestrating a scheme to commit commodities and wire fraud.
The defendants, Hefu Chai and Huaisong Xiang, are accused of misappropriating sensitive, nonpublic information from their employer, Robinhood Markets, Inc., to execute profitable trades on a decentralized derivatives exchange.
Jamie McDonald, the U.S. Attorney for the Southern District of New York, and James C. Barnacle, Jr., Assistant Director in Charge of the FBI’s New York Field Office, detailed the unsealing of complaints against the two men. Chai, a 36-year-old resident of Menlo Park, California, and Xiang, a 30-year-old from Jersey City, New Jersey, allegedly used their positions at Robinhood to gain an unfair advantage in the cryptocurrency markets.
According to the charging documents, Chai and Xiang served as engineers with access to confidential data regarding the internal timelines for Robinhood Crypto. This information included specific details on which digital assets the platform intended to list for public trading. Because a listing on a major platform often influences the market value of a cryptocurrency, this data was considered highly sensitive and proprietary.
Federal prosecutors allege that between 2025 and 2026, the pair repeatedly purchased “perpetual futures” on Hyperliquid, a decentralized exchange. These financial instruments allow traders to speculate on the price movements of an underlying asset without actually holding the token. Unlike standard futures, these contracts do not expire, but they require periodic funding payments to keep the contract price aligned with the current market spot price.
The government asserts that Chai and Xiang placed these trades immediately before Robinhood made public announcements regarding new token support. By leveraging their insider knowledge, both men allegedly breached their fiduciary duties to Robinhood. The investigation found that each defendant generated more than $50,000 in illicit profits through these transactions.
U.S. Attorney McDonald stated that the charges serve as a warning that corporate insiders cannot circumvent law enforcement by trading in decentralized derivatives or tokenized securities. FBI Assistant Director Barnacle reiterated that the bureau would continue to pursue individuals who exploit sensitive business information for personal gain.
Chai was scheduled to be presented today in the Northern District of California, while Xiang appeared before U.S. Magistrate Judge Ona T. Wang in Manhattan. Both men face one count of violating the Commodity Exchange Act, which carries a maximum 10-year prison sentence, and one count of wire fraud, which carries a maximum 20-year sentence.
The U.S. Attorney’s Office noted that the FBI led the investigation and expressed gratitude to Robinhood for its cooperation. While the statutory maximums are set by Congress, any final sentencing will be determined by a federal judge based on the specific circumstances of the case.
Source: DOJ
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