Robinhood Stock Drops 5% as Two Employees Face Crypto Fraud Charges

Robinhood shares dropped more than 5% on Wednesday, reaching a two-week low after two employees of the trading platform were charged by federal prosecutors over alleged fraudulent cryptocurrency trading. Authorities said the transactions generated more than $50,000 in gains for each employee.

The stock declined 5.3% to $104.59 shortly before 2:30 p.m. EDT, its lowest level in two weeks. Robinhood shares have also moved lower from an eight-month high reached in early September.

The Justice Department charged Hefu Chai, 36, and Huaisong Xiang, 30, on Tuesday, alleging that the pair used confidential information about upcoming cryptocurrency token listings to conduct trades. Prosecutors said they traded perpetual futures tied to memecoins and used the decentralized exchange Hyperliquid to generate profits.

Both employees had been classified by Robinhood as “Coin Aware Individuals,” a designation that restricted them from trading on Robinhood or other platforms before and during the 24-hour period following a public announcement by Robinhood Crypto regarding a new listing or delisting.

An attorney representing Xiang said his client denied the allegations. Robinhood said it had investigated the matter and reported it to regulators.

Robinhood shares are down 6.7% since the beginning of the year, when the stock was trading near $115. Despite the decline in 2026, the company’s shares remain about 177% above their price when Robinhood went public in 2021. The stock had spent more than three years trading below $25.

The charges against Chai and Xiang add to a series of cryptocurrency-related insider trading cases dating back to 2020. In 2023, former Coinbase product manager Ishan Wahi was sentenced to two years in prison after being convicted of insider trading that prosecutors said generated approximately $1.5 million in illicit profits.

Cryptocurrency financial services company Gotbit and its founder, Aleksei Andriunin, were also convicted last year. Andriunin later received an eight-month prison sentence after pleading guilty to federal wire fraud and market manipulation charges.

Those cases followed the much larger criminal case involving FTX founder Sam Bankman-Fried, who was found guilty in 2023 on all seven fraud and conspiracy counts brought against him. He was subsequently sentenced to 25 years in prison.