There are plenty of reasons to suspect that insider trading could be rampant on prediction platforms Kalshi and Polymarket.
Earlier this year, an anonymous account perfectly predicted the United States’ invasion of Venezuela, netting over $400,000. Another account correctly guessed 17 out of around 20 bets about this month’s Super Bowl half-time show, making it statistically hard to imagine they didn’t have access to inside information.
Other accounts are seemingly treading far less carefully — and getting caught. Video editor Artem Kaptur, who works for James “MrBeast” Donaldson, YouTube’s most popular content creator, has now been accused by Kalshi of insider trading and has been reported to federal regulators as a result, NPR reports.
It’s a notable development, as the first time the company has discussed findings of its investigations into market manipulation. However, whether Kaptur will be a part of a broader crackdown on insider trading by prediction platforms remains to be seen.
Accounts on Polymarket can make bets anonymously through cryptocurrencies, which could make future investigations exceedingly difficult, turning them into a prolonged investigative cat-and-mouse game.
But Kalshi may end up having an easier time than Polymarket as it’s approved and regulated by the Commodity Futures Trading Commission (CFTC) and requires users to verify their identities.
Of course, that means that for anyone looking to make some unethical cash, the takeaway from the MrBeast bust is simple: if you’re going to engage in insider trading, do it on Polymarket, not Kalshi.
In a “notice of disciplinary action” document, company officials accused Kaptur of breaking the platform’s insider trading rules in August and September of last year. His employment by Donaldson barred him from making bets related to MrBeast content, the company says, meaning that he traded on “non-public information.”
Apart from reporting him to the CFTC, Kaptur has been barred from Kalshi for two years and fined just over $20,000, $5,000 of which was “disgorgement,” or the surrendering of ill-gotten gains.
“We have a longstanding policy in place against employees using proprietary company information in order to safeguard the highest standards and ethics throughout our organization,” a Kalshi spokesperson told NPR.
Kalshi also revealed that Republican candidate for California governor Kyle Langford had been investigated after he tweeted last year that he was betting on himself on the platform. As a result, Langford was barred for five years and fined $1,000.
Prediction markets have flourished, particularly since the beginning of Trump’s second term just over a year ago. His administration has been amenable to the trend, allowing the industry to thrive in a largely unregulated environment. Multiple federal investigations have been prematurely terminated. Officials have even promised to sue any states that take legal action against Kalshi, per NPR.
Even Trump’s own Trump Media and Technology Group — the company that runs Truth Social — announced in October that it would enter the prediction markets business, meaning the president himself has a personal interest in the success of the prediction market industry.
“No system is perfect,” Kalshi’s head of enforcement, Robert DeNault, told the public broadcaster. “No financial exchange is immune from bad actors. Not stock exchanges, not banks, not prediction markets.”
“We’re committed to deterring and finding the bad actors, manipulators, and those who willingly cheat,” he added.
However, whether the company will be able to get ahold of the problem remains as uncertain as ever. In the absence of any meaningful and enforced prediction market regulations, insider traders are likely to continue.
Worst of all, while a knowledgeable few, including insiders and professional gamblers, make the majority of the gains, many other less-informed users will be left holding the bag — an unfortunate reality as sports betting and gambling continue to soar in popularity.
More on Kalshi: An Analysis Just Found Something Extremely Unflattering About What Happens to Users of Prediction Markets
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