Kalshi CEO calls on the U.S. Department of Justice to prosecute insider trading; the push for "criminal charges" behind it is a survival game

Author: Claude, Deep Tide TechFlow

Deep Tide Guide: At the Semafor Global Economic Summit, Kalshi CEO Tarek Mansour publicly stated that the U.S. Department of Justice is expected to bring criminal charges against insider trading in prediction markets, calling it “a federal crime.” This prediction-market giant—valued at $22 billion and with weekly trading volume exceeding $1 billion—has already launched 200 insider-trading investigations over the past year. In a chaotic landscape in which at least 8 regulatory bills are hanging over Capitol Hill and three states are being sued by the federal government, Kalshi is trying to pull away from competitor Polymarket by actively embracing enforcement.

One of the largest players in prediction markets, Kalshi’s CEO, is openly inviting federal prosecutors to go after wrongdoers on its own platform.

According to Semafor’s report on April 15, Kalshi CEO Tarek Mansour said at the Semafor Global Economic Summit that insider trading in prediction markets is “a federal crime now,” and that he expects the Department of Justice to bring criminal charges in some cases. He also called for establishing a federal-level consumer protection framework, to replace the current patchwork of regulation where each state does its own thing.

This statement comes at a moment when the prediction market industry is facing pressure from all directions: legislative efforts in Congress, lawsuits from state governments, investigations by the Department of Justice, and insider trading scandals breaking one after another. Meanwhile, Kalshi and Polymarket—both competitors valued at more than $20 billion—are responding to the regulatory storm with markedly different strategies.

Mansour publicly calls out: “Insider trading is a federal crime”

Mansour’s wording is quite direct. At the summit, he said, “If you engage in insider trading on Kalshi, at some point it will become a federal crime. It is a federal crime. I do expect the Department of Justice to prosecute some of these cases.”

He added that Kalshi has the authority to impose a range of penalties on violators, from fines to criminal referral— and that the company has publicly disclosed some cases, “with more coming.”

Mansour also criticized the current regulatory situation in the U.S. regarding prediction markets. He pointed out that among the 34 states that have legalized sports betting, only one state bans marketing to problem gamblers. This “patchwork” state-level regulatory system “has already failed.” He advocates for a unified consumer protection framework established by the federal government.

The timing of this statement is highly strategic. On the same day Mansour spoke, CNBC reported that both Kalshi and Polymarket are ramping up their lobbying offensive in Washington. According to OpenSecrets data, the two companies together spent nearly $1 million in 2025 on federal lobbying. Kalshi has run a large number of outdoor ads in Washington, D.C., with slogans directly stating, “We ban insider trading,” “We don’t do death markets,” and “We operate within the U.S. legal framework.”

The DOJ is already taking action: Southern District of New York prosecutors meet with Polymarket

Mansour’s remarks did not come out of nowhere. In an exclusive report on March 30, CNN said that the head of the securities and commodities fraud division in the office of the U.S. Attorney for the Southern District of New York has recently met with representatives of Polymarket to discuss how existing laws apply to potential wrongdoing in prediction markets.

The U.S. Attorney for the Southern District of New York, Jay Clayton, had already sent clear signals earlier at a securities enforcement forum in February. When asked whether he expected to see criminal prosecutions related to prediction markets, Clayton answered in the affirmative and said, “Just because it’s a prediction market doesn’t mean you’re immune from fraud charges.”

A spokesperson for the U.S. Attorney’s Office for the Southern District of New York, Nicholas Biase, said in a statement to CNN that the office has made it clear to market participants that multiple laws—including insider trading laws, anti-money laundering laws, anti-manipulation laws, and various anti-fraud laws—apply to the broad range of activities observed in prediction markets.

But the outlook for prosecution still involves legal uncertainty. Aitan Goelman, former CFTC enforcement chief and now a criminal defense attorney, told CNN that prosecutors not only need to prove that traders traded while holding material nonpublic information, but also that their conduct violated some form of trust or fiduciary duty— “and all of that is an untested area of law.”

200 investigations, fined MrBeast employee: Kalshi’s enforcement track record

Kalshi is indeed leading the way in insider-trading enforcement. According to disclosures by the company on February 25, over the past year Kalshi has launched 200 insider trading investigations, freezing a large number of flagged accounts, with more than 12 becoming active cases.

The two resolved cases publicly disclosed the same day drew widespread attention. The first involved Artem Kaptur, the video editor for top YouTube creator MrBeast. Kalshi’s investigation found that Kaptur traded about $4,000 in markets related to the MrBeast channel and achieved an “almost perfect” trading success rate on low-probability contracts—statistically an anomaly. Kalshi concluded that, as an editor, Kaptur may have had access to material nonpublic information related to his trades, and imposed a $20,397.58 fine (including $5,397.58 in profit disgorgement and a $15,000 penalty), as well as suspending his access to the platform for two years.

The second case involved a California gubernatorial candidate who traded about $200 in his own campaign market and posted trading videos on social media. Kalshi fined him $2,246.36 and banned him from trading for five years.

On the same day, the CFTC (U.S. Commodity Futures Trading Commission) issued an enforcement advisory for prediction markets, confirming that it “has full authority to regulate” illegal trading on registered exchanges, and warning that trading using insider information may violate Section 6©(1) of the Commodity Exchange Act and CFTC Rules 180.1(a)(1) and (3).

Venezuela, Iran war bets: Polymarket becomes a target

Compared with Kalshi’s proactive posture of “asking for criminal charges,” Polymarket faces more concentrated controversy.

The most explosive case happened in January this year. According to reports from PBS, CNN, and other outlets, a Polymarket user bought large quantities of contracts related to Venezuelan President Maduro being captured by U.S. forces a few hours before it happened, ultimately profiting more than $400,000. After that, around the time of the U.S. military strike on Iran in February, Polymarket saw a surge of highly timed trades from newly created accounts.

Also, Fortune reported that there are reports indicating that a KPMG insider used Polymarket to place bets on companies that the audit giant had audited.

These controversies are especially damaging for Polymarket because its U.S. site has not yet been fully launched, and the most contentious markets related to Venezuela and Iran took place among overseas users. Cross-border trading increases the difficulty of federal prosecution.

Under pressure, on March 24 Polymarket announced it would revise platform rules to explicitly prohibit users from trading contracts involving potentially confidential information or contracts that could influence the outcome of events. On the same day, Kalshi announced it would preemptively ban politicians from trading on its election markets and prohibit sports-related personnel from betting on their participation in sporting events.

Behind the $22 billion valuation: Kalshi’s survival logic

Mansour’s decision to actively call out the Department of Justice is essentially a carefully calculated positioning move.

In March 2026, Kalshi completed a $1 billion-plus Series D funding round led by Coatue Management; its valuation doubled from $11 billion to $22 billion. According to Sacra data, the company’s annualized revenue run rate has reached about $1.5 billion, weekly trading volume exceeds $1 billion, and monthly trading volume in February surpassed $10 billion. As a CFTC-approved compliant exchange, this is Kalshi’s core differentiating advantage over Polymarket.

But risks are accumulating quickly. Arizona has filed 20 criminal charges against Kalshi; Nevada has issued an operational ban; and more than 20 lawsuits are ongoing. Institutions such as Point72 and Balyasny have also banned their employees from trading in prediction markets.

Against this backdrop, it is not hard to understand the logic behind Mansour’s strategy of “asking for criminal charges”: if insider trading cannot be effectively curbed, ordinary users will lose confidence in participating, and the liquidity that prediction markets depend on will dry up. For a platform with weekly trading volume exceeding $1 billion, trust infrastructure matters more than any single trade.

Discussions on Hacker News reflect deeper skepticism. HN user tptacek pointed out the industry’s internal logical contradiction: if the value of prediction markets lies in aggregating private information to improve forecasting accuracy, then insider trading should be a feature rather than a flaw; but if they are actually unregulated gambling venues, then insider trading is like peeking at opponents’ cards in poker. “You can see what these companies think the essence of their own platforms is by how they handle the insider trading issue.”

President Trump’s son, Donald Trump Jr., invested in Polymarket through his venture fund and is also a strategic advisor to Kalshi. This political connection adds complexity to the game.