Bad bets: Recent enforcement actions against prediction market participants misusing insider information

In an article we recently published in the New York Law Journal, we outlined the Commodity Futures Trading Commission’s (CFTC) statutory framework for regulating prediction markets, like Kalshi and Polymarket, in light of recent “insider trading” activity on those platforms.^[1] In recent weeks, the CFTC, the Department of Justice (DOJ) and prediction market platforms themselves have engaged in enforcement actions that underscore the regulators’ commitment to prosecuting fraud and market manipulation. This article outlines those actions and recent internal disciplinary actions being taken by prediction market platforms.

The CFTC civil action 

Earlier this year, one successful trade on prediction markets caught regulators’ attention because it was statistically improbable without access to insider information. From December 2025 to January 2026, a trader on Polymarket bought a series of contracts through which he successfully predicted that Venezuelan President Nicolás Maduro would be deposed just hours before Maduro’s capture by U.S. special forces, and profited over $400,000. On April 23, 2026, the CFTC and DOJ both announced enforcement actions in the U.S. District Court for the Southern District of New York against the individual behind that trade, Gannon Ken Van Dyke.^[2]

The CFTC’s civil complaint alleges that Van Dyke, who was an active-duty service member in the U.S. Army, engaged in trading on Polymarket using classified nonpublic government information (NPGI) regarding U.S. operations in Venezuela. Van Dyke allegedly obtained that information through his role in the planning and execution of Operation Absolute Resolve from at least December 2025 through January 2026. Importantly, the complaint emphasizes that Van Dyke not only owed a duty of trust and confidentiality to the U.S. government by virtue of his role, but that he also signed a nondisclosure agreement providing that he would not divulge information learned from classified security briefings. Van Dyke was also subject to the Department of War Policies and Ethical Regulations, which prohibited him from engaging in financial transactions using nonpublic information and to further his own private interests.

The complaint charges Van Dyke under (i) section 6(c)(1) of the Commodity Exchange Act (CEA) and Regulation 180.1, which prohibits the use of any manipulative, deceptive or fraudulent scheme in connection with swaps or commodity transactions; and (ii) sections 4c(a)(3)–(4) of the CEA, which prohibit federal employees or agents from using NPGI that could affect swap prices to trade for personal gain, and the misappropriation of NPGI to enter into a swap. 

Through the action, the CFTC seeks to, among other things, permanently enjoin Van Dyke from engaging in conduct that is directly or indirectly in violation of the CEA its regulations and entering into transactions involving commodity interests. It also seeks disgorgement of all the profits that Van Dyke made from the trade, restitution of losses and a civil monetary penalty. 

The CFTC is clearly sending a strong message with this first insider trading action involving event contracts. In the accompanying press release, Director of Enforcement David Miller reiterated previous remarks that the division intends to “continue to be vigilant in policing the illegal use of inside information in the prediction markets and other markets within the CFTC’s jurisdiction.”^[3]

The DOJ indictment 

On the same day, the DOJ unsealed a grand jury indictment charging Van Dyke with unlawful use of confidential government information for personal gain, theft of nonpublic government information, commodities fraud, wire fraud and making an unlawful monetary transaction.^[4]

The indictment goes further than the CFTC complaint in outlining how the DOJ uncovered and traced Van Dyke’s winnings. The DOJ alleges that after successfully profiting over $400,000 on the subject trades, Van Dyke withdrew the funds from his Polymarket account and transferred them to a foreign cryptocurrency vault. Soon thereafter, Van Dyke transferred those funds to a cryptocurrency exchange account and then a brokerage account. He also took steps to conceal his identity as the trader in the Maduro-related markets by asking Polymarket to delete his account, claiming he had lost access to the email address with which the account was associated. The DOJ’s ability to investigate and uncover Van Dyke’s trades and trace them to him despite the use of cryptocurrency underscores enforcement agencies’ determination to prevent prediction markets from becoming a “haven for misappropriated confidential or classified information for personal gain.”^[5]

Kalshi’s disciplinary actions against political candidates

In its recent advisories, the CFTC has emphasized the “independent duty” of prediction market platforms to “maintain audit trails, conduct surveillance, and enforce rules against prohibited practices.”^[6] The CFTC has placed the onus on these platforms to promote the integrity of derivatives markets and monitor and assess whether certain contracts are susceptible to manipulation.^[7]

To that end, Kalshi has recently moved to ban trades by athletes, coaches and officials on their own sports, and block political candidates from trading on their campaigns.^[8] On April 22, Kalshi published three disciplinary notices involving political candidates who violated Exchange Rule 5.17(z), which prohibits a trader who is a decision-maker or has any influence on the outcome of an underlying event from trading on contracts relating to that event. The disciplinary notices have resulted in two settlements and an ongoing contested action:

• Matt Klein, a Minnesota Democratic state senator and congressional candidate, purchased a single contract worth around $50 relating to his own primary race. He cooperated with Kalshi’s investigation and agreed to a settlement involving a five-year suspension from the platform and a $539.85 fine.^[9]
• Ezekiel Enriquez, a candidate in a Republican primary in Texas for a House of Representatives seat, traded an amount less than $100 in contracts relating to his own race. He cooperated with Kalshi and settled for a five-year suspension and a $784.20 fine.^[10]
• Mark Moran, a candidate in Virginia’s Democratic U.S. Senate primary placed trades in two markets, the first regarding who will run for office, and the second regarding who would become the Virginia Democratic Senate nominee. Moran refused to settle the matter, stating that he engaged in the trade to “highlight how this company is destroying young men.”^[11] Kalshi imposed a five-year suspension and a financial penalty of $6,229.30, plus disgorgement of any resulting profits.^[12]

These disciplinary actions demonstrate Kalshi’s ongoing determination to play by the rules^[13] and highlight the effectiveness of the CFTC’s recent advisory campaign. 

On April 30, Polymarket also responded to the CFTC’s advisories and the civil action by announcing a partnership with Chainalysis, Inc., a blockchain analytics platform that is primarily used for compliance, investigation and risk management, to detect insider trading and suspicious activity on its platform.^[14] In a statement, Polymarket said the partnership “unlock[s] the ability to proactively detect threats and report them to law enforcement and regulators with credible, on-chain data” and sends a “clear signal” that fraud and market manipulation are “not welcome on Polymarket.” 

More to come in this space.