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Home/Markets & Investing/STABLECOIN US LEGISLATION · SEC ENFORCEMENT ACTION

White House Warns Staff Against Prediction Market Bets Following $600,000 Insider Trading Wave

AH

Adrian Holloway

stablecoin US legislation · Apr 10, 2026

White House Warns Staff Against Prediction Market Bets Following $600,000 Insider Trading Wave

Source: The Digital Ledger Data Terminal

Three accounts on Polymarket and Kalshi pocketed more than $600,000 by correctly calling the timing of an Iranian ceasefire. This activity occurred alongside a wave of unusual activity in futures markets, where more than $760 million worth of oil futures contracts changed hands in under two minutes, 15 minutes before President Donald Trump announced a pause on strikes against Iran via Truth Social.

Related Brief1d ago
market integrity

A surge in oil futures trading minutes before a major geopolitical announcement reveals a gap in how insider trading rules apply to new prediction markets

Six million barrels of Brent and West Texas Intermediate crude oil futures changed hands in a two-minute window just before President Donald Trump announced a five-day pause in strikes on Iran. That volume dwarfed the 700,000-barrel average seen in the same period over the previous five days. The surge occurred between 6:49 a.m. and 6:51 a.m. New York time—more than 14 minutes before Trump’s public statement at 7:05 a.m. A $500 million position was established on those contracts just before the announcement. The timing aligns with past instances where trades preceded major policy shifts. Federal law prohibits government employees from using non-public information for financial gain, a rule reinforced by the STOCK Act of 2012. The White House has no evidence of staff profiting from insider trading but sent an internal email reminding employees of their ethical obligations. Meanwhile, platforms like Polymarket and Kalshi operate in a regulatory gray area. The Commodity Futures Trading Commission claims jurisdiction over event-based contracts, but enforcement against insider trading in these markets remains undefined. Even without confirmed misconduct, repeated patterns of well-timed trades erode market integrity. When privileged information appears to drive profits, public trust in both financial markets and government institutions weakens. The rise of unregulated prediction markets amplifies the risk, exposing a gap between existing ethics rules and the mechanisms needed to enforce them.

On March 24, the White House Management Office sent a staff-wide email cautioning employees against using their positions to place well-timed bets on prediction markets. The warning followed the suspicious trades tied to the Iran conflict.

Related Brief2d ago
regulatory compliance

Prediction market bets on inside information trigger federal insider trading liability

Employees who use material nonpublic information to place wagers on prediction markets face civil or criminal liability for insider trading. The Commodity Futures Trading Commission identifies event contracts on platforms like Polymarket and Kalshi as swaps or derivatives. Under CEA Section 6(c)(1) and Regulation 180.1, the CFTC prohibits trading on such information in derivatives markets. This regulatory framework creates a path for federal enforcement. The Department of Justice may prosecute such trades under the criminal wire fraud statute or for violations of the Commodity Exchange Act. Companies also face regulatory scrutiny and vicarious liability under CEA Section 2(a)(1)(B) for employee violations committed within the scope of employment.

Both Polymarket and Kalshi announced tighter insider trading rules on the same day as the White House warning, barring users from acting on stolen confidential information or betting on outcomes they can influence. In response to the following events, Sen. Richard Blumenthal of Connecticut and Sen. Andy Kim of New Jersey introduced a bill that would ban prediction market bets related to war or military action.

Related Brief2d ago
digital asset regulation

The CLARITY Act would replace SEC enforcement with registration pathways for crypto platforms

Trading platforms and intermediaries would gain registration pathways under the Digital Asset Market Clarity Act. The bill, which passed the House of Representatives in July 2025, delineates regulatory responsibilities between the SEC and CFTC. It introduces protections, disclosure rules, and custody standards. It also addresses stablecoins and DeFi safe harbors and establishes policies against illegal finance. Treasury officials claim these rules would end regulatory uncertainty, boost institutional participation, and anchor crypto development domestically.

stablecoin US legislationSEC enforcement action

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