The Commodity Futures Trading Commission (CFTC) issued an advisory on two cases that involve the misuse of nonpublic information and fraud in prediction markets.
One of the cases dates back to May 2025 social media posts that contained videos that appeared to show a political candidate trading on his own candidacy on Kalshi, the prediction market site.
Kalshi’s compliance team contacted the candidate that same day, and the trader acknowledged that he knew these trades were improper and violated Kalshi’s rules. Kalshi imposed a $2,246.36 financial penalty and a 5-year suspension from direct or indirect access to the exchange. Based on this fact pattern, the trader potentially violated certain provisions within the Commodity Exchange Act among other regulations.
Then in August and September 2025, an individual traded a prediction market related to a YouTube channel while having an employment relationship with the subject of the contract, in violation of exchange rules. Upon investigation, Kalshi discovered that the trader was an editor for a YouTube channel who likely had advanced knowledge of the contents of the channel’s videos prior to the time they were publicly posted. Kalshi concluded that this was a violation and imposed a $20,397.58 financial penalty and a 2-year suspension from direct or indirect access to the exchange.
While Kalshi’s internal enforcement program handled these matters, the Commission has full authority to police illegal trading practices. In appropriate cases, the CFTC’s Division of Enforcement will investigate and prosecute violations, as it always has with respect to conduct occurring on designated contract markets (DCMs). The Division continues to coordinate with regarding their enforcement dockets and referral of appropriate potential violations to the Division for investigation.