US House of Representatives investigates insider trading on prediction markets Polymarket and Kalshi to prevent officials from profiting from "state secrets"

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Making a fortune in prediction markets using state secrets? The U.S. Congress has officially taken action! House Oversight Committee Chairman James Comer announced the launch of an insider trading investigation into Polymarket and Kalshi, demanding that the platforms hand over internal data regarding user vetting and trade monitoring. Previously, not only did a U.S. service member use classified information to profit $400,000, but others also placed precise bets on the eve of military strikes. A bipartisan group in Congress is brewing new legislation that intends to completely ban government officials and members of Congress from participating in prediction markets. (Previous coverage: Prediction market Polymarket wallet hacked! 5,000 POL drained every 30 seconds, over $600,000 evaporated) (Background: Polymarket rumored to be secretly entering Japan, planning to lobby the government to legalize prediction markets by 2030) With the explosive growth in the popularity of prediction markets like Polymarket and Kalshi, the issue of "insider trading" hidden behind the windfall profits has finally drawn intense attention from the U.S. federal government. U.S. House Committee on Oversight and Accountability Chairman James Comer officially announced on CNBC on Friday (22nd) that he has sent letters to Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour, requesting that both companies explain and provide internal records on how they prevent insider trading. This congressional investigation is not without cause. Recently, several controversial bets have occurred on prediction markets that have raised national security and ethical concerns: - U.S. military personnel profiting from secrets: Last month, a U.S. soldier was arrested for allegedly using internal classified information to place precise bets on Polymarket that former Venezuelan leader Nicolas Maduro would step down in January, illegally profiting approximately $400,000. - Military actions leaked in advance: According to a recent investigation by The New York Times, more than 80 Polymarket users exhibited highly suspicious trading patterns, including placing precise bets in the "hours leading up to" military strikes launched by the U.S. and Israel against Iran. - Politicians acting as both players and referees: On the Kalshi platform, which is regulated by the U.S. CFTC, although contracts related to war or death are prohibited, three congressional candidates were caught and suspended in April for "betting on their own election outcomes." Comer sternly pointed out in the letter: "The rapid growth of this platform, its cryptocurrency infrastructure, and the anonymity it affords users may create unintended structural conditions that allow bad actors—particularly individuals with access to national security secrets—to exploit." Although Kalshi is headquartered in New York and regulated by the CFTC, and does not allow anonymous betting, while Polymarket is blockchain-based, operates offshore, and allows anonymity, both are now facing the same political pressure. The committee has officially requested that both platforms submit relevant documents and communication records by June 5, specifically detailing how they: - Implement identity verification (KYC) for domestic and foreign account holders. - Strictly enforce geographic restrictions (such as blocking users in restricted regions). - Detect abnormal trading activity to prevent insider trading on global platforms. Behind this investigation lies a strong bipartisan consensus. Earlier, seven lawmakers led by Democratic Representative Chris Pappas had strongly urged the committee to issue subpoenas to thoroughly investigate the matter. Comer clearly stated in the interview that this investigation is not only to understand the prevalence of insider trading but also to pave the way for future legislation. He emphasized: "We must pass some form of legislation. I don't think it's too much to ask that members of Congress, government employees, or presidential administration officials be prohibited from participating in prediction markets."

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