Kalshi insider trading enforcement sparks criticism

"The Commission has full authority to police illegal trading practices occurring on any DCM, including those described above related to prediction markets. Kalshi used its own announcement to underscore that we ban insider trading and said it had launched about 200 investigations over the past year. More than a dozen of those inquiries led to formal enforcement actions."

"One case centered on a political candidate who bet on his own race for governor. Kalshi said the candidate placed roughly $200 on contracts tied to his campaign and later promoted the wager online. Because exchange rules bar traders from betting on outcomes they can directly influence, the company issued a five-year ban and fined him ten times the amount of the trade."

"The CFTC said the trader acknowledged that he knew these trades were improper and violated Kalshi's rules and added that the conduct may have breached anti-fraud provisions in the Commodity Exchange Act."

The CFTC released an advisory detailing two enforcement matters involving insider trading on Kalshi, a prediction-market exchange. The agency asserted its full authority to police illegal trading practices on any designated contract market, including prediction markets. Kalshi disclosed conducting approximately 200 investigations over the past year, resulting in more than a dozen formal enforcement actions. One case involved a political candidate who bet on his own gubernatorial race, placing roughly $200 on related contracts and promoting the wager online. Kalshi banned the candidate for five years and fined him ten times the trade amount. The CFTC noted the trader acknowledged knowing the trades violated exchange rules and potentially breached anti-fraud provisions in the Commodity Exchange Act. Fines collected are being donated to derivatives education nonprofits.

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