Robinhood Markets, Inc. (NASDAQ:HOOD) stock is trading lower Wednesday as investors weigh criminal insider trading charges against two former engineers and a setback for cryptocurrency legislation in the U.S. Senate.
The Department of Justice charged the former Robinhood engineers Tuesday over an alleged cryptocurrency insider trading scheme.
Meanwhile, the Nasdaq gained 0.74%, while the S&P 500 rose 0.20%.
Former Engineers Charged
Hefu Chai and Huaisong Xiang were indicted on commodities fraud and wire fraud charges.
Prosecutors allege the former employees misused confidential information about Robinhood Crypto’s plans to support additional cryptocurrencies.
Between 2025 and 2026, Chai and Xiang allegedly used that information to buy perpetual futures on Hyperliquid before Robinhood’s public announcements. Each allegedly made more than $50,000 from the trades.
“Misappropriating confidential information to trade in the derivatives markets for personal benefit is illegal,” said Jamie McDonald, U.S. attorney for the Southern District of New York.
A Robinhood spokesperson told Benzinga that the company “immediately investigated” and reported the incident to authorities. “Robinhood takes market integrity seriously and has zero tolerance for insider trading,” the spokesperson added.
Senate Crypto Bill Stalls
Separately, the CLARITY Act failed to reach the 60 votes needed to advance in the U.S. Senate.
The cloture motion failed with 41 senators voting against it, dealing a setback to legislation aimed at establishing a clearer U.S. regulatory framework for digital assets.
Robinhood Markets Price Action
HOOD Price Action: Robinhood Markets shares were down 4.58% at $105.39 at the time of publication on Wednesday, according to Benzinga Pro data.
Image via Shutterstock
Login to comment