WASHINGTON, Feb. 25, 2026 — The Commodity Futures Trading Commission said its Division of Enforcement has issued an advisory following the public release of two enforcement matters involving misuse of nonpublic information and fraud in prediction markets, also known as event contracts, traded on KalshiEX, a Designated Contract Market.
According to the agency, the advisory underscores that the Commission retains full authority under the Commodity Exchange Act to police illegal trading practices occurring on any DCM, including prediction markets.
The advisory follows two cases handled through Kalshi’s internal enforcement program involving trading activity that the exchange determined violated its rules.
Kalshi enforcement actions
In one matter from May 2025, social media posts appeared to show a political candidate trading on contracts tied to his own candidacy. Kalshi’s compliance team contacted the individual the same day, and the trader acknowledged that the activity was improper and violated exchange rules prohibiting trading in a contract over which the trader has direct or indirect influence over the outcome.
Kalshi imposed a $2,246.36 financial penalty, including $246.36 in disgorgement and a $2,000 penalty, along with a five-year suspension from direct or indirect access to the exchange. The CFTC said the conduct potentially violated Section 6(c)(1) of the Commodity Exchange Act and Commission Regulation 180.1(a)(1) and (3), which prohibit manipulative schemes and fraudulent conduct.
In a separate matter during August and September 2025, an individual traded a prediction market related to a YouTube channel while having an employment relationship or other formal affiliation with the subject of the contract. Kalshi concluded there was reasonable belief that the trades were based on material non-public information misappropriated in violation of a pre-existing duty of trust and confidence.
The exchange imposed a $20,397.58 financial penalty, including $5,397.58 in disgorgement and a $15,000 penalty, along with a two-year suspension from direct or indirect access. The CFTC said the conduct potentially violated prohibitions on misappropriation of confidential information, commonly known as insider trading, under Section 6(c)(1) of the Act and Regulation 180.1(a)(1) and (3).
Commission authority over DCM trading
The CFTC stated that, while Kalshi’s internal enforcement program addressed the matters, the Commission has full authority under the Act to investigate and prosecute illegal trading practices occurring on any DCM.
The advisory references prohibited conduct including misappropriation of confidential information, pre-arranged or noncompetitive trading, wash sales, disruptive trading, fraud, and manipulation under various provisions of the Commodity Exchange Act and related regulations.
The Commission also reiterated that DCMs have an independent duty under Section 5(d) of the Act to maintain audit trails, conduct surveillance, and enforce rules against prohibited practices. The Division said it will continue coordinating with DCMs regarding enforcement dockets and referral of appropriate potential violations for investigation.
