The U.S. Attorney's Office for the Southern District of New York has indicted two Robinhood engineers on charges related to insider crypto trading. The indictment names the defendants as Hefu Chai (36) and Huaisun "Jerry" Xiang (30).

Allegations in the indictment

Prosecutors allege the defendants had advance knowledge of which tokens and when they would be listed on Robinhood Crypto. According to the filing, listings on the platform regularly triggered rapid price increases, creating predictable trading opportunities.

How the scheme reportedly worked

Investigators say the engineers repeatedly opened long positions in perpetual futures on the trading venue Hyperliquid before public listing announcements. After Robinhood posted official listings, the indictment alleges, the defendants sold positions to capture price gains.

• Both individuals are accused of using privileged internal information about upcoming listings to trade ahead of announcements.
• The trades reportedly involved repeated entries and exits timed to Robinhood’s public disclosures.
• Each defendant is alleged to have realized more than $50 K in profits from the scheme.

Charges and potential penalties

According to prosecutors, the defendants face charges including commodities futures fraud and wire fraud. The complaint states sentences of up to 10 years for the commodity-related counts and up to 20 years for wire fraud, creating a potential combined maximum of 30 years.

The filing also notes the discrepancy between the potential prison exposure and the scale of alleged gains, pointing out that the sums involved correspond to roughly four months of typical compensation for an engineer at Robinhood.

Proceedings moving forward

The case will proceed through the federal court process in the Southern District of New York. Prosecutors will present their evidence at trial or in pretrial proceedings, and the defendants will have the opportunity to respond to the charges in court.