According to BlockBeats, on September 16, the U.S. Attorney's Office for the Southern District of New York (SDNY) announced on September 15 that two Robinhood engineers, Hefu Chai and Huaisong Xiang (also known as Jerry Xiang), were charged with merchandise fraud and wire fraud for allegedly using undisclosed company information to trade Hyperliquid perpetual contracts.
SDNY alleges that during their time at Robinhood, the two individuals had access to confidential information regarding Robinhood Crypto's new token listings and launch dates. Between 2025 and 2026, they allegedly repeatedly purchased Hyperliquid perpetual contracts for the corresponding tokens before the company publicly announced their launch, profiting after the announcements; each is suspected of profiting over $50,000.
Prosecutors emphasized that although perpetual contracts are traded on on-chain derivatives platforms, they are still subject to legal repercussions. U.S. Attorney Jamie McDonald stated that corporate insiders cannot circumvent securities and commodities market laws by trading perpetual contracts, tokenized securities, or other similar financial products.
This case will also serve as an important signal for the regulation of on-chain derivatives. In the past, pre-listing trading of tokens was often seen by the market as an issue of information advantage within the crypto industry; the fact that the SDNY has directly filed a case as commodity fraud and telecommunications fraud means that law enforcement agencies will more clearly extend traditional insider information rules to the decentralized perpetual contract market.
According to the announcement, 36-year-old Chai will appear in court for the Northern District of California, and 30-year-old Xiang will appear in the Southern District of New York. Both face charges of violating the Commodity Exchange Act, which carries a maximum sentence of 10 years in prison, and wire fraud, which carries a maximum sentence of 20 years in prison. SDNY emphasizes that the indictment at this stage contains charges, and both defendants are presumed innocent pending a court ruling.