This week, the Commodity Futures Trading Commission (CFTC) and the US Department of Justice charged an active duty military member with insider trading in regard to the arrest of Nicolas Maduro, the former dictator of Venezuela. The allegations were that Gannon Ken Van Dyke, the individual in question, used knowledge of the looming capture of Maduro to place a bet on Polymarket and then received the gains using non-public information.
Yesterday, CFTC Chairman Mike Selig took to X to affirm his intent to prosecute individuals or entities that breach insider trading laws:
“I’ve been crystal 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 US Department of Justice] to charge an individual with insider trading involving event contracts. The CFTC won’t tolerate insider trading in our markets, and our Division of Enforcement will continue to vigilantly police our markets for any illegal actions.”
The fast-growing prediction markets, led by Polymarket and Kalshi but with other new entrants such as Coinbase, are a new sector of finance for enforcement agencies.
According to reports, there have been “hundreds” of allegations of insider trading pertaining to prediction markets. At the same time, enforcement actions and criminal prosecutions have been few.
Beyond Van Dyke’s indictment, Israeli authorities arrested two service members for using non-public information to benefit from bets placed. There have been a few others.
A research document published last month estimated that more than $143 million has been gained from questionable bets on Polymarket (February 2024 to February 2026) that may have benefited from insider information.
Still, prosecuting insider trading in traditional markets is difficult. In 2025, the SEC pursued 31 cases of insider trading. Even though the SEC has sophisticated tools to uncover insider trading, the line is blurred between doing research, a hunch, rumors, or luck when the feds come knocking at your door. The burden of proof is high, and direct proof of an infraction is rare.