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.
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.
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.
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.
