The Commodity Futures Trading Commission’s (CFTC) Division of Enforcement has issued a statement on two cases regarding prediction markets and the misuse of nonpublic information. According to the CFTC, the alleged transgressions occurred on KalshiEX and include the following.
- In May 2025, social media posts contained videos that appeared to show a political candidate trading on his own candidacy on Kalshi. Kalshi’s compliance team contacted the candidate, and the trader acknowledged that he knew these trades were improper and violated Kalshi’s rules, which prohibit trading in a contract over which the trader has direct or indirect influence over the outcome. The CFTC states that Kalshi imposed a $2,246.36 financial penalty (disgorgement of $246.36 related to the improper trading activity, plus a $2,000.00 penalty) and a 5-year suspension from direct or indirect access to the exchange. The CFTC statesthat the trader potentially committed fraud
- In August and September 2025, an individual traded a prediction market related to a YouTube channel while having an employment relationship or other formal affiliation with the subject of the contract, through which the trader likely had access to material non-public information related to his trades, in violation of exchange rules. Kalshi apparently discovered that the trader was an editor for a YouTube channel who likely had advanced knowledge of the channel’s videos before they were publicly posted. Kalshi imposed a $20,397.58 financial penalty (disgorgement of $5,397.58 in profits from the illicit trading, plus a $15,000.00 penalty) and a 2-year suspension from direct or indirect access to the exchange. The CFTC states that the trader potentially violated prohibitions on misappropriation of confidential information in breach of a pre-existing duty of trust and confidence to the source of the information.
Noting that Kalshi took appropriate action, the CFTC stated that Designated Contract Markets have a duty to maintain information and audit trails. The CFTC also said that, when appropriate, it will initiate an investigation into possible violations.
Kalshi has filed disciplinary action notices with the CFTC.
