This week, Commodity Futures Trading Commission (CFTC) and US Department of Justice charged an active duty military member who engaged in insider trading related to his arrest Nicolas MaduroFormer dictator of Venezuela. The allegations were as follows Gannon Ken Van DykeThe individual used his knowledge of Maduro’s impending capture to place a bet. Polimarket and then obtained the profits using non-public information.
Yesterday CFTC Chairman Mike Selig led to x to approve intent to prosecute individuals or organizations that violate insider trading laws:
“I have been very clear: Anyone who engages in insider trading in any of our markets will face the full force of the law. Today, the CFTC took parallel action with the (U.S. Department of Justice) to charge an individual with insider trading involving activity contracts. The CFTC will not tolerate insider trading in our markets, and our Enforcement Division will continue to vigilantly police our markets for any unlawful activity.”
Fast-growing prediction markets, led by Polymarket and Kalshi but with other new entrants such as Coinbase, are a new financial sector for execution institutions.
According to reports, there are “hundreds” of allegations of insider trading related to prediction markets. At the same time, enforcement actions and criminal prosecutions are few.
Beyond Van Dyke’s indictment, Israeli authorities arrested two soldiers who used non-public information to benefit from bets. There were a few more people.
A research paper published last month estimated more than $143 million in profits from questionable bets at Polymarket (from February 2024 to February 2026) that may have benefited from insider information.
Yet insider trading is difficult to prosecute in traditional markets. The SEC pursued 31 insider trading cases in 2025. Although the SEC has sophisticated tools to uncover insider trading, the line between investigating, a hunch, rumors or luck becomes blurred when the feds come knocking on your door. The burden of proof is high and direct proof of a violation is rare.
