Regulators are also concerned that Robinhood is taking advantage of young investors. Meanwhile, Infini filed a lawsuit in Hong Kong after a $50 million crypto hack, using on-chain legal notices to pursue the hacker. In another incident, Binance suspended a staffer over insider trading allegations linked to a token launch. The individual is accused of using confidential information from a former BNB Chain role.
Robinhood Faces Scrutiny Over Prediction Markets
Massachusetts’ securities regulator initiated a probe into Robinhood’s new prediction markets feature after raising concerns about its potential link to gambling behavior among young investors. According to Reuters, Massachusetts Secretary of State Bill Galvin confirmed that his office issued a subpoena to Robinhood last week to obtain details about the company’s marketing strategies and the number of Massachusetts users engaging with its sports-related event contracts, particularly those tied to college basketball tournaments.
Galvin criticized Robinhood’s approach, and accused the platform of connecting gambling-like bets on popular sports events to investment accounts, thereby drawing in inexperienced investors with what he described as gimmicks. His office is investigating whether Robinhood’s offerings violate state securities laws and whether they were adequately vetted after previous regulatory concerns.
Robinhood unveiled its prediction markets hub on March 17. It offers event contracts via Kalshi, which is a platform registered with and regulated by the Commodity Futures Trading Commission (CFTC). The offerings include contracts on sports tournaments and economic indicators like the May federal funds rate. A spokesperson for Robinhood defended the move by clarifying that the event contracts are CFTC-regulated.
Despite the scrutiny, Robinhood Markets (HOOD) shares closed relatively unchanged on March 24 after a 9% rally earlier in the day. While the CFTC and Galvin’s office have yet to issue official statements regarding the probe, the situation proves that there is still regulatory tension around prediction markets.
Event contracts allow users to wager on outcomes ranging from sports and elections to cryptocurrency prices, and they have been gaining popularity through platforms like Kalshi and the blockchain-based Polymarket. However, they also increasingly attracted regulatory attention.
Last month, Robinhood withdrew its Super Bowl event contracts just one day after launch, due to a request from the CFTC. As part of the Massachusetts probe, Robinhood was also asked to provide internal communications surrounding the launch of the college basketball contracts, particularly in light of the CFTC’s earlier objection to the Super Bowl offerings. The CFTC reportedly made similar inquiries to Kalshi and Crypto.com about the regulatory compliance of their own Super Bowl-related products.
Infini Hack Triggers Legal Battle in Hong Kong
While Robinhood faces the Massachusetts legal system, stablecoin payment platform Infini filed a lawsuit in Hong Kong against developer Chen Shanxuan and several unidentified people after a hack that drained almost $50 million in crypto assets. The legal action was initiated on March 24, and was communicated through an on-chain message directed at the attacker, naming Chen and three unknown persons with wallet access as defendants.
(Source: Etherscan)
Infini was able to trace 49.5 million USDC from its stolen funds, and these assets are now part of an ongoing legal dispute. The company warned that any parties currently holding the funds cannot claim to be bona fide purchasers without notice of the dispute.
To serve the defendants, the Hong Kong court issued an injunction order and a writ of summons through an on-chain message. This is increasingly used to deliver legal notices to anonymous wallets associated with stolen crypto. The summons requires the defendants to appear in court for a return date hearing.
In an attempt to recover the funds, Infini previously offered the attacker a 20% bounty after the Feb. 24 exploit. The team claimed it obtained IP and device data tied to the attack and was actively monitoring the blockchain addresses involved. In its message, Infini promised to cease all tracking and analysis and offer immunity if 80% of the funds were returned. Despite this offer and the legal pressure, the attacker did not return any of the assets.
The exploit took place not long after Bybit experienced the largest crypto hack on record when $1.4 billion was stolen from its multisignature wallet on Feb. 21. According to Marwan Hachem, COO of cybersecurity firm FearsOff, the timing of the Infini hack seemed strategic. He suggested the attackers took advantage of the global focus on the Bybit breach, believing their operation will go unnoticed during the chaos.
Binance Suspends Staffer Over Insider Trading
Meanwhile, Binance recently suspended a member of its Binance Wallet team after allegations of insider trading involving non-public information about a project’s token launch. The suspension came after Binance Wallet launched an internal investigation on March 23 in response to a complaint that the staff member engaged in front-running trades to gain improper profits.
Crypto insider trading is the illegal practice of using non-public or confidential information about a crypto project or exchange to make profitable trades before the information becomes public. This could involve buying or selling tokens based on knowledge of upcoming listings, partnerships, or events like token launches. It gives an unfair advantage and is considered market manipulation.
In a statement that was posted on March 25, Binance said that the investigation revealed that the employee, who joined Binance Wallet last month, previously held a business development role at BNB Chain and allegedly used confidential knowledge of an upcoming Token Generation Event (TGE) to buy large quantities of the project’s tokens ahead of its public announcement. The tokens were reportedly sold shortly after the announcement for a large profit.
Binance Wallet said the employee used multiple linked wallet addresses to execute the trades and violated company policy by taking advantage of insider information from a former position. The person was immediately suspended, and the company stated it will pursue further disciplinary actions and cooperate with authorities to potentially bring legal charges.
Although Binance did not name the individual, users on X identified Freddie Ng, a former BNB Chain operations manager who recently joined Binance Wallet, as the person in question. X user “py” pointed to wallet activity showing a profit of $82,400 from U DEX Platform’s UUU token, and linked it to an address that was originally funded by “freddieng.bnb,” a handle Ng publicly shared.
Binance Wallet acknowledged the role of the community in uncovering the incident but pointed out that rewards for whistleblowing will only be granted to those who submitted tips through its official email channel. As part of this, the company announced it will distribute a $100,000 reward equally among four anonymous people who reported the incident through the proper channel.
