CFTC warns prediction market insider traders crackdown

The US Commodity Futures Trading Commission has warned that insider trading in prediction markets will face enforcement action, signalling a tougher regulatory stance on the fast-growing sector.

CFTC enforcement director David Miller said the agency is actively monitoring suspicious activity and will target those trading on misappropriated or non-public information.

“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.

The regulator clarified that event contracts are treated as financial “swaps,” meaning insider trading laws apply in the same way as traditional derivatives markets.

The warning comes as prediction markets surpass $20 billion in monthly volume and face increasing scrutiny from lawmakers over potential abuse and manipulation.

Recent cases of well-timed trades linked to geopolitical events and political developments have heightened concerns about insider advantages in these markets.

Platforms such as Kalshi and Polymarket have already introduced new rules to curb insider trading, as regulatory pressure intensifies from both federal agencies and lawmakers.

The CFTC said it will prioritise serious violations rather than minor cases, focusing on market abuse, fraud, and breaches of anti-money laundering rules as part of its broader enforcement strategy.