Kalshi said Wednesday that it has banned and fined a YouTube streamer’s editor and a California politician for making banned trades, the first public enforcement activity to be taken by the US-regulated prediction market.
The company said the unnamed video editor violated its insider trading rules by wagering about $4,000 on YouTube streaming markets. The editor received a two-year ban and a financial penalty of five times the size of his initial trade.
He “likely had access to material non-public information connected to his trading,” the company said.
Kalshi also said it banned a California politician who wagered $200 on his own gubernatorial candidacy, “and then posted about it on social media,” for five years. The candidate, who is now running for Congress, was also fined about 10 times his initial trade size, Kalshi said.
These enforcement actions don’t carry criminal penalties. They’re carried out according to the procedures in Kalshi’s rulebook, which says that Kalshi compliance officials aim to wrap up their investigations in 12 months and lays out a hearing procedure that can take months to resolve.
The company announced earlier this month that lawyer Robert DeNault is leading its enforcement efforts, which range from enforcing its rules to working with outside authorities.
Other financial exchanges, like the New York Stock Exchange and the CME Group, also regularly announce enforcement activity against members for violations of their rules. Kalshi differs in part because many of its members are ordinary people, and not finance-industry professionals.
The two bans announced on Wednesday are also being reported to the US Commodity Futures Trading Commission, a federal body that regulates futures, swaps, and options, Kalshi said.
The CFTC has said it has “exclusive jurisdiction” over prediction markets, which has caused friction with states that assert that certain markets amount to illegal gambling that is supposed to be regulated by state laws.
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