The US government has initiated three previously unreported investigations into trading on the prediction market Polymarket, according to documents obtained by WIRED through a Freedom of Information Act request. These investigations, spurred by growing concerns about potential insider trading, are focused on events contacts related to pardons issued by former President Joseph Biden and the Iran event contracts on Polymarket. The CFTC, the agency responsible for regulating prediction markets, has approved orders allowing enforcement division to launch private investigations into potential violations of the Commodities Exchange Act. Specifically, the CFTC has authorized investigations into potential insider trading on Polymarket events contacts related to pardons, two weeks after NPR reported a suspicious trader netting over $300,000 on pardon-related markets in the Biden Administration. The agency also approved an investigation into ‘Iran event contracts’ on Polymarket, with the order granting permission to take testimony, obtain subpoenas, administer oaths, and produce documents. Selig, the CFTC Chairman, authorized the first investigation in May, and then approved a second, focused on ‘Iran event contracts’ two weeks later, mirroring the findings of a NPR report on a suspicious trader. The CFTC also initiated a third investigation, this time concerning suspected insider trading on Google-themed Polymarket event contracts, with the focus on individuals potentially involved in insider trading related to Google’s 2025 Year in Search Ranking. The agency’s actions follow a series of recent developments, including the approval of an order allowing the enforcement division to launch a private investigation into potential violations of the Commodities Exchange Act. The CFTC has also reportedly investigated Polymarket itself, with the company recently undergoing a fundraising round led by Donald Trump Jr.’s venture capital firm, 1789 Capital, valuing the company at $21 billion. The CFTC has also launched investigations into potential insider trading on Kalshi, Polymarket’s archrival, in the past. According to The New York Times, Kalshi referred at least 32 cases to the agency, and the CFTC fined former US representative George Santos $35,000 for his behavior related to a Kalshi contract about whether he would attend Trump’s 2026 State of the Union address. The investigation into Santos has resulted in two arrests, one of which involved the use of classified information to generate over $400,000 in profits on events contracts. The Department of Justice is also investigating the Iran War and the Biden pardon contracts, though the DOJ has not yet provided an immediate response. A former CFTC staffer states, ‘Parallel criminal investigations are likely, given the significance of the matters,’ highlighting the agency’s intensified scrutiny of the prediction market.’ The CFTC’s legal actions are expected to continue, with the agency’s role in these investigations potentially expanding as the investigation into Polymarket continues. The investigation’s focus is on identifying potential violations of the Commodities Exchange Act and exploring broader regulatory oversight of the prediction market industry. The investigation’s scope is being narrowed down based on the content of the documents obtained by WIRED, and it is a significant development in the regulatory landscape of the prediction market.
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Source: Wired
