Kalshi and Polymarket Face Congressional Probe Over Suspicious Insider Trades - Blockonomi
by Brenda Mary · BlockonomiTLDR:
Table of Contents
- TLDR:
- Congressional Scrutiny Targets Prediction Market Platforms
- Kalshi and Polymarket Face Separate but Related Concerns
- Chair Comer demands Kalshi and Polymarket submit identity and trade records by June 5, 2025.
- A U.S. soldier was arrested for using classified info to earn $400,000 on Polymarket bets.
- Over 80 Polymarket users placed suspicious trades hours before U.S. and Israeli strikes in Iran.
- Comer seeks legislation banning government employees and lawmakers from prediction market trading.
Prediction market insider trading concerns have prompted a formal congressional investigation into platforms Kalshi and Polymarket.
House Oversight Committee Chair James Comer, R-Ky., announced the probe on CNBC’s “Squawk Box” on Friday. Comer sent letters to both companies’ CEOs requesting key documents by June 5.
The investigation focuses on identity verification, geographic restrictions, and suspicious trade detection across both platforms.
Congressional Scrutiny Targets Prediction Market Platforms
Comer’s probe centers on whether government insiders could use non-public information for financial gain. He stated, “There’s a concern now that members of Congress, members of the president’s administration, any type of government employee, can use basic insider knowledge and make huge profits on anything government-related.” The investigation aims to assess how widespread such activity may already be on these platforms.
Comer also signaled interest in passing legislation to restrict participation in prediction markets. He added, “I think it wouldn’t be too much to ask to say members of Congress can’t participate in the predictions market, nor can government employees or people in the president’s administration.” This marks the latest in a series of congressional efforts to regulate the fast-growing sector.
Polymarket, a blockchain-based platform licensed in Panama, has faced scrutiny over its anonymous trading structure.
Comer wrote to Polymarket CEO Shayne Coplan that “the rapid growth and mainstreaming of this platform, the cryptocurrency infrastructure, and the anonymity it affords users may have created unintended structural conditions that bad actors — especially individuals with national security clearances — can exploit.” A U.S. soldier was recently arrested for allegedly using insider information to profit roughly $400,000 on the platform.
A New York Times investigation further found that more than 80 Polymarket users made trades with suspicious timing.
These trades were placed hours before U.S. and Israeli strikes in Iran. Comer referenced these findings directly in his letter to Coplan.
Kalshi and Polymarket Face Separate but Related Concerns
Kalshi, regulated by the Commodity Futures Trading Commission and headquartered in New York, does not permit anonymous trading.
However, the platform recently suspended three congressional candidates who wagered on their own races. Comer wrote to Kalshi CEO Tarek Mansour that “the rapid global expansion of Kalshi’s platform raises questions about whether internationally placed event contracts are subject to equivalent identity verification and insider trading prohibitions as domestic event contracts.”
Kalshi’s head of communications, Elisabeth Diana, responded by saying the company “looks forward to engaging with the Committee and its members about the systems and processes that we have spent years building.”
She added that “as a US-regulated exchange we are proud of our comprehensive protections against insider trading.” The company welcomed the investigation as an opportunity to demonstrate its compliance standards.
Both companies had already strengthened internal rules earlier this year following public scrutiny over suspicious trades.
Comer wrote in his letter that “internal records held by prediction market platforms are the only means by which bad actors can be identified and to determine whether platforms are meeting their legal obligations.” He stressed that companies must demonstrate accountability through full document disclosure.
Seven Democratic lawmakers, led by Rep. Chris Pappas of New Hampshire, had previously urged Comer to subpoena both platforms.
They wrote on May 11 that “the American public has a legitimate interest in knowing whether individuals entrusted with classified national security information have used that access for personal financial gain.” Comer’s investigation now formally moves that process forward.