US regulator has renewed warnings over improper trading in prediction markets after two enforcement cases exposed how individuals misused privileged information while trading on KalshiEX.

The Commodity Futures Trading Commission’s Enforcement Division issued an official advisory reminding traders and designated contract markets (DCMs) that insider conduct and fraud remain subject to full federal oversight.

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Political Candidate Traded on Own Campaign

One of the highlighted cases involved a political candidate who traded contracts tied to the outcome of his own election campaign. The trades reportedly surfaced last year through social media videos showing the candidate placing bets on KalshiEX.

According to the watchdog, Kalshi’s compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term team contacted the individual the same day, and he admitted knowing the trading violated exchange rules. The platform imposed a $2,246.36 sanction, including disgorgement of profits and a five-year suspension from access.

A second case also from last year involved an individual who traded prediction contracts linked to a YouTube channel while employed as an editor for that same channel. Investigators determined the trader likely used advance knowledge of upcoming videos for personal gain.

Related: Coinbase Asks Courts to Bar States From Regulating Prediction Markets

Kalshi imposed a $20,397.58 fine and suspended the trader for two years, citing violations tied to the misuse of material nonpublic information. The regulator has described the activity as similar to insider trading, falling under the same legal prohibitions on misappropriation of confidential data obtained through a position of trust.

CFTC Reiterates Oversight Powers

While Kalshi handled these cases internally, the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term underlined that it retains full authority to prosecute illegal trading on any registered exchange. The advisory specifically referenced statutes covering insider trading, prearranged trades, wash sales, disruptive trading, and broader fraud and manipulation offenses.

The commission also reminded exchanges of their duty to maintain robust surveillance and enforcement programs, as required by the Commodity Exchange Act’s core principles.

Read more: Prediction Markets Boom Draws CZ-Owned Trust Wallet, Joining MetaMask and Polymarket Integration

CFTC Chair Michael Selig recently escalated a jurisdictional clash over prediction markets, directing the agency to intervene in ongoing court disputes and asserting that the US derivatives regulator, rather than state authorities, oversees event contracts.

I have some big news to announce… pic.twitter.com/3OBNTaOnIL

— Mike Selig (@ChairmanSelig) February 17, 2026

In a video posted on X, he said the CFTC has filed an amicus brief to defend what he described as its “exclusive jurisdiction” over prediction markets, which he likened to derivatives markets.

Selig warned that state entities challenging the CFTC’s authority over event contracts “will see” the agency “in court,” describing their actions as an “onslaught of state-led litigation.” He said the wave of enforcement activity has targeted platforms including Coinbase, Crypto.com, Kalshi and Polymarket.