The U.S. Commodity Futures Trading Commission (CFTC) has issued a stern warning to prediction market traders, emphasizing that insider trading laws apply to event contracts. “There’s a myth in mainstream media and social media that insider trading doesn’t apply in the prediction markets … That is wrong,” said CFTC enforcement director David Miller, speaking at a New York University panel.
Miller, a former federal prosecutor appointed March 2, clarified that the Commission will use prosecutorial discretion, focusing only on cases involving tips or trading with misappropriated information. “We will not dedicate resources to trivial cases,” he said. He also confirmed that event contracts are legally swaps, not gaming, meaning federal insider trading laws apply.
Prediction markets have grown rapidly, surpassing $20 billion in monthly volume, raising concerns after well-timed trades related to President Donald Trump’s announcements, the capture of Venezuelan leader Nicolás Maduro, the Iran invasion, and the death of Ayatollah Khamenei.
Platforms like Kalshi and Polymarket have introduced insider trading rules, while Congress proposed the Public Integrity in Financial Prediction Markets Act of 2026 and the PREDICT Act to curb misuse by government officials.
The CFTC plans to prioritize core enforcement areas, including market abuse and anti-money-laundering violations, signaling that serious violations in prediction markets will face full legal scrutiny.
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This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.