Prediction Market: U.S. House Panel Launches Insider Trading Probe Into Polymarket, Kalshi

The U.S. House Committee on Oversight and Government Reform has launched an investigation into insider trading on prediction market platforms Polymarket and Kalshi. The Committee Chair, James Comer, has sent letters to both platforms requesting information about how they are tackling this issue.

House Panel Investigates Insider Trading On Prediction Market Platforms

In a press release, the House Committee announced that its chair, James Comer, has opened an investigation into insider trading on prediction market platforms Polymarket and Kalshi. Rep. Comer sent letters to the platforms’ CEOs, Shayne Coplan and Tarek Mansour, requesting documents and information to assess the compliance measures in place to guard against insider trading.

The Committee chair said that they are examining the adequacy of these companies’ safeguards to prevent access to offshore sites to circumvent compliance with applicable U.S. federal regulations governing these platforms. He further noted that the internal records these platforms hold are the only means of identifying bad actors and determining whether the platforms are meeting their legal obligations.

As such, the House Committee has requested documents and information to understand how prediction market platforms Polymarket and Kalshi implement identity verification for domestic and international account holders, enforce geographic restrictions, and detect anomalous trading activity to prevent insider trading.

This development comes amid heavy scrutiny and a crackdown on prediction market platforms. As CoinGape reported, Minnesota recently signed into law a ban on prediction markets, which criminalizes operating such platforms in the state.

Other U.S. states are also cracking down on these prediction markets, claiming that they are operating illegal gambling businesses. Furthermore, the scrutiny on these platforms also extends beyond the U.S. Bloomberg reported that South Korea is probing Polymarket to determine whether the platform hosts illegal gambling content.

Growing Pattern Of Insider Trading Calls For Congressional Action

Rep. Comer said the growing pattern of insider trading on prediction market platforms suggests congressional action may be necessary. The House Committee alluded to a recent NYT investigation that highlighted how over 80 users on the top crypto prediction market, Polymarket, placed suspiciously timed bets.

Specifically, this included bets before the undisclosed U.S. and Israeli military operations against Iran, which have raised concerns that the safeguards across these platforms may be inadequate. The Committee further cited that gubernatorial candidate Kyle Langford placed a wager on his own race on Kalshi, while three other politicians reportedly placed bets on their own campaigns.

Lastly, the Committee highlighted a federal indictment that alleged that a U.S. military man placed bets using classified information about Operation Absolute Resolve, which revolved around the capture of the Venezuelan President Nicolás Maduro. The military man, U.S. Army Master Sergeant Gannon Ken Van Dyke, is said to have made over $409,000 profits from these bets.