Democratic lawmakers press for action on insider trading allegations in prediction markets, citing specific incidents and violations of the STOCK Act.
At least 42 Democratic lawmakers have sent a letter to the U.S. Commodity Futures Trading Commission (CFTC) Chair Mike Selig and the Office of Government Ethics, urging them to issue guidance prohibiting federal employees from engaging in insider trading on prediction markets.
The letter highlights multiple incidents that have raised concerns, including bets on the capture of Venezuelan leader Nicolás Maduro and wagers on the length of a White House press secretary's speech.
Recent Incidents and National Security Concerns
Additional cases mentioned in the letter involve suspicious trades related to the potential invasion of Iran and the death of Ayatollah Khamenei, which have sparked worries about national security risks and the signaling of impending attacks.
The lawmakers also referenced reports of trades on whether former Department of Homeland Security Secretary Kristi Noem would be fired, emphasizing the need for immediate safeguards.
Prediction market platforms like Kalshi and Polymarket have announced plans to implement guardrails to prevent such incidents, as these markets allow users to trade contracts on future event outcomes.
The letter argues that these activities violate the STOCK Act, a 2012 law signed by former President Barack Obama that bars government officials from using material, nonpublic information for personal gain.
Since the CFTC has classified prediction market contracts as regulated derivatives, the lawmakers assert that insider trading in these markets falls under the STOCK Act's prohibitions.
The group has requested a briefing and answers to specific questions by April 13, including whether the CFTC has investigated any reports of federal employees involved in such trading and what steps are being taken to detect and prevent it.
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