Beyond the Brokerage Feed
Why Firms Need On-Chain Trading Monitoring Now
A recent alleged insider trading case involving two former Robinhood engineers highlights a growing challenge for compliance teams: employee trading activity is increasingly taking place beyond the reach of traditional brokerage feeds.
On September 15, 2026, federal prosecutors charged Hefu Chai and Huaisong “Jerry” Xiang with commodities fraud and wire fraud, as detailed in the official announcement from the U.S. Attorney’s Office. Prosecutors allege they used confidential information about upcoming Robinhood Crypto token listings to trade ahead of public announcements, each profiting more than $50,000.
The key compliance lesson is not simply what allegedly happened, but where the trading occurred.
The Real Gap Is Visibility, Not Policy
According to prosecutors, Chai and Xiang had access to confidential information about upcoming token listings and were prohibited from trading relevant tokens around announcement periods.
Yet prosecutors allege they traded perpetual futures on Hyperliquid, a decentralized derivatives exchange, rather than buying the tokens directly. Perpetual futures allow traders to take positions on an asset’s price without owning the underlying token. For compliance teams, that distinction matters.
Many personal account dealing programs rely on employee disclosures, brokerage feeds, pre-clearance, and restricted lists. But employee activity can now extend across decentralized exchanges, crypto derivatives, prediction markets, and multiple wallets.
A policy may prohibit the activity. The harder question is whether the firm can actually see it.
Trading Is Evolving. Oversight Must Follow.
Recent enforcement shows that regulators are looking beyond traditional securities and brokerage accounts. In August 2026, the CFTC brought and settled charges involving the misuse of material nonpublic information to trade prediction market event contracts. Now, the Robinhood case highlights similar risks involving crypto derivatives on a decentralized platform.
The instrument or venue may change, but the underlying conduct risk remains.
Traditional controls are still essential, but they may not provide a complete picture when activity moves on-chain. Employees can potentially use multiple wallets, move assets between blockchain networks, or trade derivatives linked to a digital asset without directly owning it.
The population at risk is also expanding. Engineers, product teams, and other employees may have early visibility into listings, launches, or other potentially market-moving information, even if they are not traditionally considered access persons.
Three Questions Compliance Teams Should Ask
As markets evolve, firms should consider whether their employee compliance programs can answer three questions:
- Are derivatives and event contracts covered?
Perpetual futures, prediction market contracts, and other derivatives should be considered within the same risk framework as the underlying asset or event. Firms should assess whether their pre-clearance and restricted-list controls adequately capture these instruments. - Can you see beyond a disclosed wallet?
Wallet disclosure is a starting point. On-chain monitoring can provide greater visibility into activity across connected wallets and blockchain transactions, helping firms build a more complete picture of employee activity. - Are the right employees in scope?
Access to sensitive information extends beyond traditional investment professionals. Firms should consider whether employees with early visibility into digital asset listings, product roadmaps, or event contract launches are appropriately covered by employee compliance policies and monitoring.
How StarCompliance Can Help
The Robinhood case is another reminder that having a policy is only part of effective oversight. Firms also need the visibility to determine whether employees are following it.
As trading expands across digital assets, derivatives, and prediction markets, employee compliance programs need monitoring capabilities that can keep pace.
StarCompliance (Star) helps firms extend oversight beyond traditional brokerage feeds with Crypto Dealing & Tokenized Asset Compliance Solutions. By connecting employee activity, policies, and surveillance, firms can gain greater visibility into emerging risks and identify potential issues earlier.
Is your employee trading program keeping pace? Connect with Star to learn how our Crypto Dealing & Tokenized Asset Compliance Solutions can help close visibility gaps and strengthen oversight.
You can book a demo [HERE].
