U.S. lawmakers have begun questioning the Commodity Futures Trading Commission over the agency’s inaction on alleged insider trading in prediction markets tied to geopolitical events.
Summary
- Seven House lawmakers questioned the Commodity Futures Trading Commission over its response to alleged insider trading in prediction markets tied to military events.
- The letter pointed to contracts linked to U.S. actions in Iran and Venezuela, raising concerns about trades that appeared timed around sensitive government decisions.
- Lawmakers asked the CFTC to clarify its enforcement approach and respond by April 15, as legal disputes over platforms like Kalshi and Polymarket continue.
Seven members of the U.S. House of Representatives wrote a letter to CFTC Chair Michael S. Selig questioning why the agency has not acted more decisively, even when it has the authority “to apply its rules and regulations for the purpose of preventing evasion of the [act’s] underlying swap provisions,” under the Commodity Exchange Act.
Lawmakers were concerned over what they described as “morally obscene” event contracts involving U.S. military actions in Iran and Venezuela, as many of the suspicious insider trades appeared tied to the timing and outcomes of potential U.S. involvement.
“The prevalence of event contracts that appear to flout United States law is concerning and indicative of a sector lacking proper oversight. Although many of the most flagrant recent trades occurred outside the United States, this should not preclude the Commission from undertaking enforcement actions to uphold and enforce United States law,” the lawmakers wrote.
“Such corrupt trades deserve swift and decisive oversight,” the letter continued, adding that allowing such contracts to persist raises “troubling concerns about the Commission’s desire and capacity to fulfill a global regulatory role.”
The House members have asked Selig to respond to a set of six questions by April 15.
The letter comes as multiple U.S. state gaming authorities have filed lawsuits against platforms like Kalshi and Polymarket over the legality of their offerings and the scope of the CFTC’s authority.
While the letter signals that lawmakers agree the commission has jurisdiction over prediction markets, the broader regulatory framework remains unresolved.
The CFTC, for its part, has not dismissed the issue. Last week, enforcement director David Miller addressed concerns over insider trading.
“There’s a myth in mainstream media and social media that insider trading doesn’t apply in the prediction markets… That is wrong,” Miller said.
However, the agency did not outline any immediate enforcement actions, but said efforts would be selective and focused on cases involving the misuse of confidential information.