The Van Dyke Enforcement Actions: Prediction Markets, Insider Trading & Your Compliance Obligations

On April 23, 2026, the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) brought first-of-their kind parallel enforcement actions against a U.S. Army soldier accused of using nonpublic military information to trade event contracts on a prediction market.

What Happened

According to the DOJ indictment and the CFTC civil complaint, U.S. Army Special Forces member Gannon Ken Van Dyke possessed confidential information about Operation Absolute Resolve, the mission that led to the capture and arrest of Venezuelan President Nicolás Maduro on January 3, 2026. Between December 2025 and January 2026, Van Dyke allegedly used that information to place more than $30,000 in trades on Polymarket event contracts tied to Venezuelan political outcomes, including a market that would resolve “Yes” if Maduro was removed from power by the end of 2026. Following the public announcement of Maduro’s arrest, Van Dyke profited over $400,000 on those positions.

Legal Framework

The CFTC's complaint grounds its jurisdiction in the Commodity Exchange Act’s (CEA) swap definition, characterizing prediction market event contracts as swaps because their settlement turns on the occurrence or non-occurrence of a specified future event with potential financial, economic, or commercial consequences, “such as the occurrence of a weather event, the outcome of an election, the price of a market index, or prevailing interest rates.” CFTC Complaint ¶ 27. Whether all prediction market event contracts satisfy the CEA's swap definition remains unsettled. The CFTC's characterization here reflects an enforcement posture it has advanced in prior actions, but no court has squarely resolved the question as a matter of law.

The five-count DOJ indictment alleges that Van Dyke unlawfully used and stole confidential government information for personal gain and, in doing so, committed commodities fraud, wire fraud and money laundering. While the charges relating to misuse of government information are notable as the first ever invocation of the “Eddie Murphy Rule” against government employees trading swaps on nonpublic government information, the commodities fraud count is the most consequential from a broader regulatory compliance perspective. That charge rests on Section 6(c)(1) of the CEA and CFTC Rule 180.1(a), which prohibit trading schemes involving material nonpublic information (MNPI) when the information is obtained through fraud, deception, or a breach of a duty of trust or confidence. Modeled on SEC Rule 10b‑5, this framework does not limit liability to government information or traditional financial instruments but instead applies to event contracts across a wide range of subject areas.

Consistent with Rule 180.1(a)’s pivotal focus on breach of duty, the CFTC’s complaint relies on the misappropriation theory articulated in United States v. O’Hagan. Under that theory, fraud occurs when a trader uses MNPI in breach of a duty of trust or confidence owed to the source of the information, regardless of any relationship with market counterparties. The CEA expressly imposes liability on aiders and abettors. The CFTC has also generally extended liability to tippers and tippees through its anti-fraud and manipulation authority.

Why It Matters

The implications of these enforcement actions extend well beyond the securities markets. Event contracts that constitute swaps, futures contracts or options under the CEA, whether traded on prediction markets operating as registered Designated Contract Markets (DCMs) or on unregistered platforms, fall within the CFTC’s enforcement authority. The reach of that authority is not limited to the trader and the platform itself. The CEA’s liability framework extends potential exposure to tippers, tippees, aiders and abettors, and controlling persons. Prediction markets present a distinct and underappreciated compliance risk that existing insider trading policies were not designed to address. For companies whose employees have access to relevant MNPI, whether in financial, governmental or operational contexts, the risk that such information could be misused in prediction markets must be explicitly addressed in their compliance frameworks.

The CFTC has emphasized that DCMs have an independent obligation to surveil trading, maintain audit trails, and enforce prohibitions on illegal trading practices. The decision to bring a case directly against a trader rather than relying solely on internal platform enforcement underscores the CFTC’s expectation that DCMs implement compliance programs comparable in rigor to traditional derivatives exchanges and demonstrate a willingness to take action if the CFTC feels those measures are not preventing insider trading.

Beyond platforms, public companies and financial institutions with established insider trading controls will need to ensure those policies adequately cover prediction market activity. Private companies and organizations outside industries traditionally associated with commodities trading may face regulatory risk, civil liability and reputational harm if employees trade on confidential information related to their work. Prediction markets expose sectors such as politics, journalism, sports and entertainment to insider trading risks in ways not previously anticipated. As a result, many companies will need to either strengthen existing regulatory compliance protocols or build entirely new ones.

Industry participants have also taken notice of insider trading and manipulation risks on prediction markets. Kalshi recently disclosed three self-initiated enforcement matters involving candidates who had allegedly placed wagers on their own electoral outcomes, emphasizing that platforms must continuously refine their surveillance capabilities to stay ahead of insider threats. Robinhood has cited market abuse and insider trading concerns as a basis for declining to list certain event contracts, including “mention” markets. Legislative activity has also accelerated, with more than ten bills targeting prediction markets in 2026.

Key Compliance Takeaways

The Van Dyke enforcement actions, ongoing legislative activity and the rapid growth of prediction markets signal that companies whose employees have access to MNPI relevant to event contract categories actively traded on prediction markets should assess their compliance programs accordingly:

• Evaluate whether existing insider trading, personal trading and confidentiality policies expressly address prediction market trading.
• Update restricted trading lists to reflect categories of information that may constitute MNPI in prediction market contexts.
• Strengthen information barrier protocols for vendors and other third parties outside existing compliance frameworks who may have access to MNPI.
• Provide targeted training on prediction market risks to employees with MNPI access.
• Weigh reputational risk alongside regulatory exposure when assessing employee trading, particularly in high‑profile event contracts.
• For DCMs, assess whether trade surveillance, audit trails, KYC, AML and disciplinary procedures are adequate to deter insider trading and mitigate CFTC enforcement risk. 

For further guidance on building a robust compliance program to address these risks, please contact the Manatt professional with whom you work or reach out to any of the authors listed here.

United States v. Van Dyke, 1:26-cr-00156 (S.D.N.Y. filed Apr. 23, 2026); CFTC v. Van Dyke, No. 1:26-cv-3369 (S.D.N.Y. filed Apr. 23, 2026).

The CFTC has previously asserted swap jurisdiction over prediction market event contracts through enforcement proceedings. See, e.g., In the Matter of Blockratize, Inc. d/b/a Polymarket.com, CFTC No. 22-09 (Jan. 3, 2022).  The swap definition is less clearly satisfied where contracts are tied to purely political, entertainment, or non-economic outcomes. The CFTC has not issued a final rule definitively resolving the classification question.

CFTC complaint issues three counts against Van Dyke that mirror Counts One through Three of the DOJ indictment.

These provisions do not require proof of a pre-existing duty of trust or confidence (unlike CEA Section 6(c)(1) and CFTC Rule 180.1(a)) and operate directly on the act of using government-acquired information for personal trading gain. See 7 U.S.C. §§ 6c(a)(3), 6c(a)(4)(C).

United States v. O'Hagan, 521 U.S. 642 (1997).

7 U.S.C. § 13(a)(2).

7 U.S.C. §§ 9, 6(c). The CEA has no explicit tipper/tippee framework analogous to the securities laws.

The CEA defines “swap” broadly to include any agreement whose payment or delivery obligation is contingent on the occurrence or non-occurrence of an event associated with a potential financial, economic or commercial consequence. 7 U.S.C. § 1a(47)(A)(ii).

Press Release, CFTC, CFTC Enforcement Division Issues Prediction Markets Advisory (Feb. 25, 2026), (two disciplinary responses by Kalshi’s compliance team resulted in Kalshi disciplining traders with financial penalties (including disgorgement) and suspension from the platform).

Press Release, CFTC, CFTC and MLB Sign Groundbreaking MOU (Mar. 19, 2026), ; (CFTC and Major League Baseball signed a Memorandum of Understanding agreeing to “discuss, cooperate, and exchange information concerning issues of common interest including protecting the integrity of professional baseball and the relating prediction markets”).

For example, both Kalshi and Polymarket host event contract markets in categories such as politics, sports, culture (e.g., TV, music, and movies), and mentions (i.e., whether a certain person will say a certain word or phrase in a specified setting such as a press conference, public speech or earnings call).

Bobby DeNault, Enforcement Update: Kalshi Continues Crackdown on Political Insider Trading, Kalshi News (Apr. 22, 2026), https://news.kalshi.com/p/kalshi-political-insider-trading-enforcement-update.

See Yogonet International, Robinhood Excludes Certain Prediction Markets Amid Insider Trading and Manipulation Concerns (Apr. 14, 2026), .

Of particular note are the PREDICT Act (H.R. 8076), which would prohibit certain government and military officials from entering into contracts dependent on specific political events, the Public Integrity in Financial Prediction Markets Act (H.R. 7004), which would prohibit government officials from trading event contracts using MNPI, and The End Prediction Market Corruption Act (S. 4017), which would categorically prohibit the President, Vice President, and Members of Congress from trading any event contract.