- Federal prosecutors in New York have charged two former Robinhood engineers with commodities fraud and wire fraud over trades made before the broker announced new token listings.
- Each allegedly made more than $50,000 using perpetual futures on Hyperliquid, according to the prosecutors’ press release. Nothing has been proven and none of it has been tested in court.
- The charges route around an unsettled question in US law: whether a crypto token counts as a security for insider dealing purposes.
Prosecutors in New York have charged two former Robinhood engineers with fraud, alleging they traded on advance knowledge of which tokens the broker was about to list. The sums involved are modest by crypto-crime standards. The charges they chose are the part that carries weight.
When a broker with millions of customers adds a new token, the price of that token often jumps, and everyone buying in that first hour is trading against whoever already knew the announcement was coming. This case is US prosecutors saying that knowing first and betting on it is a crime, even when the asset involved is nowhere near a regulated stock exchange.
That is a signal about where enforcement is heading rather than a settled rule. One set of charges against two people does not change the law, and the people charged have not been found guilty of anything.
What prosecutors allege
The US Attorney’s Office for the Southern District of New York says two men, aged 36 and 30, misappropriated confidential information about upcoming listings on Robinhood Crypto and used it to trade perpetual futures on Hyperliquid, a decentralised derivatives venue. The alleged trading ran between 2025 and 2026, ahead of the public announcements. Each defendant is said to have profited by more than $50,000, and each faces a count under the Commodity Exchange Act alongside wire fraud.
Both men have been named by several outlets. We are not repeating the names here, because they have been charged rather than convicted, and the profit figures come from a prosecutor’s summary of its own case rather than from verified trading records. No plea, trial outcome or response from either man appears in the reporting we have seen.
“Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal,” said Jamie McDonald, the United States Attorney for the Southern District of New York, in the press release announcing the charges. He added that “today’s charges make clear that corporate insiders cannot evade the securities and commodities laws by trading based on misappropriated information in derivatives like perpetual futures, securities, or other similar financial instruments.”
Read that second sentence as prosecutorial framing rather than a finding. A press release announcing charges is an argument for the case, and the sweep of it, tokenised securities and “other similar financial instruments”, reaches a good deal further than anything a two-defendant fraud case will actually decide.
Why a listing date is worth money
A token listing on a large retail platform does something specific: it puts an asset in front of a very large number of people who previously could not easily buy it, all at the same moment. Traders have watched that pattern for years, usually under the name the “Coinbase effect”, and the size of the move varies enormously from token to token. What is consistent is the timing. The move, when there is one, clusters around the announcement.
So the valuable information was not what the tokens were worth. It was when a lot of buying was about to arrive.
How you profit without buying anything
A perpetual future is a bet on the price of something, with no expiry date. You do not own the token. You post collateral and take a position that gains or loses as the price moves, and most venues let you take on leverage, so a few thousand dollars of collateral can control a much larger exposure. That is how sums in the tens of thousands are allegedly made on moves of a few percent, without ever holding the asset.
There is an irony in the venue. Hyperliquid runs its order book , which means positions and their timing are publicly visible in a way that trades inside a broker’s internal system are not. A pattern of well-timed positions taken shortly before the same broker’s announcements is exactly the kind of thing that shows up in that data after the fact.
The law they weren’t charged under
US insider dealing rules were built for securities, and whether a particular token is a security has been argued over for the best part of a decade without a clean answer. Rather than test that, prosecutors have used commodities fraud and wire fraud, which rest on a misappropriation theory: that the pair took information belonging to their employer and breached a duty owed to it. On that theory the legal status of the tokens barely matters, which is our reading of why the case was built this way rather than any statement from the DOJ.
A UK version of this would sit in similar territory. The FCA’s market abuse regime attaches to instruments admitted to trading on UK venues, and most crypto tokens are not. A UK employee leaking a listing date would more plausibly face a fraud or breach of confidence case brought by the employer than a market abuse action. Again, our inference, not a ruling anyone has handed down.
What to watch
Whether the defence contests the profit figures, and whether this is an indictment or a complaint, both of which will be clearer once the case reaches arraignment. Whether SDNY brings further cases involving perpetual futures, which would turn one enforcement action into a pattern worth following in our policy coverage. And whether Robinhood says anything about how listing information is handled internally, which it had not in the material we reviewed. Our Robinhood review covers the broker’s crypto offering for UK users.