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Robinhood Markets shares fell 3.4% on Tuesday and moved lower again in extended-hours trading as federal prosecutors charged two former company engineers with commodities fraud and wire fraud over alleged trades made ahead of Robinhood Crypto token listings. The decline also came during broader weakness in crypto-linked stocks, making it difficult to attribute the move specifically to the criminal cases.
Prosecutors Allege Trades Ahead of Listings
The U.S. Attorney’s Office for the Southern District of New York charged Hefu Chai, 36, and Huaisong Xiang, 30, on Sept. 15. Prosecutors allege the engineers misappropriated confidential information about whether and when Robinhood Crypto would support additional cryptocurrencies.
Between 2025 and 2026, the pair allegedly used that information to buy perpetual futures on Hyperliquid before Robinhood announced listings of the underlying tokens. Prosecutors say each made more than $50,000 from the trades. U.S. Attorney Jamie McDonald said:
“Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal.”
Engineers Had Access to Listing Information
Chai worked at Robinhood from about 2021 until May 2026 and served as a technical lead involved in listing new digital assets on Robinhood Crypto. Xiang joined around 2024 and also worked on digital-asset listings.
Robinhood had classified both as “Coin Aware Individuals,” according to the complaints. The designation subjected them to trading restrictions around Robinhood Crypto listing and delisting announcements.
The complaints remain allegations. Each defendant faces one count of commodities fraud and one count of wire fraud.
Robinhood Says It Reported the Conduct
Robinhood said it investigated the activity and reported it to law enforcement and regulators. The Justice Department also thanked the company for cooperating with the investigation.
The charges are against the former employees, not Robinhood itself. An attorney for Xiang has said his client denies the allegations and intends to contest the case. Robinhood closed Sept. 15 at $110.45, down 3.4%, before moving lower in extended-hours trading. Available trading data does not establish how much, if any, of HOOD’s decline was caused by the charges against the former employees.
