HOOD Stock Extends Slide Overnight: Ex-Employees Face Crypto Insider Trading Charges

• Chai and Xiang allegedly each profited more than $50,000 from their illicit trading.
• U.S. prosecutors charged Chai and Xiang with one count each of violating the Commodity Exchange Act. 
• Meanwhile, HOOD stock fell more than 3% at close on Tuesday and continued to decline in the overnight session after the CLARITY Act failed to advance in the Senate.

Two former employees of Robinhood Markets Inc. (HOOD) were charged with fraud for using confidential insider information to trade cryptocurrency-linked perpetual futures, as per a statement from the U.S. Attorney's Office, Southern District of New York. 

The engineers, Hefu Chai, 36, and Huaisong Xiang, 30, allegedly purchased perpetual futures tokens on Hyperliquid, a decentralized exchange, between 2025 and 2026 ahead of the company’s public announcements that the underlying cryptocurrency tokens would be listed on Robinhood Crypto.

Robinhood did not immediately respond to a request for comment from Stocktwits on the allegations. 

What Are The Allegations Against The HOOD Employees?

U.S. Attorney for the Southern District of New York Jamie McDonald and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation James C. Barnacle, Jr., charged Chai and Xiang with one count each of violating the Commodity Exchange Act. 

As per the statement, Chai and Xiang allegedly each profited more than $50,000 from their illicit trading.

“Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal,” McDonald said in the statement. 

“That is exactly what we allege Hefu Chai and Huaisong Xiang have done. 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, tokenized securities, or other similar financial instruments.”

Rohit Chauhan, researcher at The Coin Bureau, noted the charges in a post on X, saying that while the charges do not pertain to any tokenized launches on the Robinhood Chain, it was “not a good look” for the company.

HOOD Stock Deals With Impact Of Clarity Act Passage Failure

Meanwhile, HOOD stock fell more than 3% at close on Tuesday and continued to decline in the overnight session after the CLARITY Act, a key bill to regulate digital assets, failed to advance in the Senate on Tuesday.

The Senate failed to advance the CLARITY Act in a 50-49 procedural vote on Tuesday, falling short of the 60 votes needed to pass the bill. Four Republicans joined Democrats in opposing the bill, which sought to establish a clearer regulatory framework for digital assets. 

HOOD Stock: Retail Stance

On Stocktwits, retail sentiment around HOOD stock was ‘bearish’ at the time of writing, with message volume up 71%, according to platform data. 

HOOD stock has fallen more than 4% so far in 2026. 

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