Shout it out and quickly check for insider trading on Kalshi! Behind actively seeking criminal punishment and prosecution is the survival game of the prediction market.

Kalshi CEO Tarek Mansour expects the U.S. Department of Justice to file criminal charges against insider trading in prediction markets, and calls this a federal crime.

Deep Tide Introduction: Kalshi CEO Tarek Mansour publicly stated at the Semafor Global Economic Summit that he expects the U.S. Department of Justice to file criminal charges against insider trading in prediction markets, calling it “a federal crime.” This prediction-market giant, valued at $22 billion with weekly trading volume of more than $1 billion, has launched 200 insider trading investigations in the past year. With a chaotic landscape in which at least 8 regulatory bills hang over Congress and three states are facing federal prosecutions, Kalshi is trying to distance itself from its rival Polymarket by actively embracing enforcement.

Kalshi’s CEO—one of the biggest players in the prediction market—is publicly inviting federal prosecutors to go after illegal actors on its own platform.

According to a report by Semafor on April 15, Kalshi CEO Tarek Mansour said at the Semafor Global Economic Summit that insider trading in prediction markets “is now a federal crime,” and he expects the Department of Justice to bring criminal charges in some cases. He also urged the establishment of a federal-level consumer protection framework to replace the current patchwork of state-by-state regulation.

This comes at a time when the prediction market industry is being attacked on all sides: legislation in Congress, lawsuits by state governments, investigations by the Department of Justice, and a string of insider trading scandals. Meanwhile, Kalshi and Polymarket—two competitors both valued at more than $20 billion—are responding to this regulatory storm with distinctly different strategies.

Mansour makes a public call: “Insider trading is a federal crime”

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

He added that Kalshi has the right to impose a range of penalties on violators, from fines to referrals for criminal prosecution. The company has already publicly disclosed some cases at large, and “more are coming.”

Mansour also criticized the current state of U.S. state-level regulation of 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” system of state-level regulation “has already failed.” He argued for the federal government to establish a unified consumer protection framework.

The timing of this statement is also quite strategic. On the same day as Mansour’s speech, CNBC reported that both Kalshi and Polymarket are ramping up their lobbying efforts in Washington. According to OpenSecrets data, the two companies together spent nearly $1 million in 2025 on federal lobbying. Kalshi placed extensive 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.”

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

Mansour’s remarks did not come out of thin air. According to CNN’s exclusive report on March 30, the head of the Securities and Commodities Fraud Division of the U.S. Attorney’s Office for the Southern District of New York has recently met with representatives of Polymarket to discuss how existing laws apply to potential misconduct in prediction markets.

U.S. Attorney Jay Clayton of the Southern District of New York had already sent a clear signal at a securities enforcement forum in February. When asked whether he expected criminal prosecutions related to prediction markets, Clayton answered in the affirmative and said, “It’s not as though it’s a prediction market, and therefore you get to be immune from fraud charges.”

A spokesperson for the Southern District of New York U.S. Attorney’s Office, Nicholas Biase, said in a statement to CNN that the office has explicitly informed 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 activities observed in prediction markets.

But the prosecution outlook still faces legal uncertainty. Former CFTC enforcement chief and now criminal defense lawyer Aitan Goelman told CNN that prosecutors need to prove not only that traders traded while holding material nonpublic information, but also that their actions violated some kind of fiduciary duty or duty of trust—“and all of this is untested legal territory.”

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

Kalshi is indeed ahead in insider trading enforcement. According to the company’s disclosure 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 of them becoming active cases.

Two publicly disclosed resolved cases released the same day drew widespread attention. The first involved Artem Kaptur, the video editor of YouTube top creator MrBeast. Kalshi’s investigation found that on markets related to the MrBeast channel, Kaptur traded about $4,000 and achieved an “almost perfect” trading success rate on low-probability contracts—statistically abnormal. Kalshi determined that as an editor, Kaptur might have been exposed to material nonpublic information related to his trades, fined him $20,397.58 (including $5,397.58 in profit recovery and a $15,000 penalty), and suspended his platform access for two years.

The second case involved a California gubernatorial candidate who traded about $200 on 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.

In the same day’s announcement, the CFTC issued enforcement guidance for prediction markets, confirming that it “has full authority to regulate” illegal trading on registered exchanges, and warning that trading using inside information may violate Section 6©(1) of the Commodity Exchange Act and CFTC Rule 180.1(a)(1) and (3).

Venezuela and Iran war bets: Polymarket becomes a target

Compared with Kalshi’s posture of proactively “asking for prosecution,” Polymarket faces more concentrated controversy.

The most explosive case happened in January this year. According to reports from PBS, CNN, and other media, a Polymarket user bought a large amount of contracts related to Venezuelan President Maduro being captured by U.S. forces just hours before it happened, ultimately profiting more than $400,000. After that, around the time of U.S. military strikes against Iran in February, Polymarket once again saw a surge of precise timing trades from newly created accounts.

Also, according to a Fortune report, there are reports that an internal KPMG insider used Polymarket to place bets on companies audited by the auditing giant.

These controversies are especially damaging for Polymarket because its U.S. site has not yet fully gone live, and the most controversial Venezuela- and Iran-related markets occurred among overseas users—cross-border trading increases the difficulty of federal prosecutions.

Under pressure, Polymarket announced on March 24 that it would revise platform rules to explicitly prohibit users from trading on contracts that may involve confidential information or could influence event outcomes. Kalshi, on the same day, announced preemptive bans on politicians trading on their own elections, as well as bans on sports-related personnel trading on their participation in sporting events.

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

Mansour’s decision to proactively call out the Department of Justice is, at its core, a carefully calculated positioning strategy.

Kalshi completed a funding round in March 2026 led by Coatue Management, raising more than $1 billion. 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 compliant exchange approved by the CFTC, this is its most core competitive advantage over Polymarket.

But the risks are accumulating quickly. Arizona has filed 20 criminal charges against Kalshi, Nevada has issued operational bans, and more than 20 lawsuits are ongoing. Institutions such as Point72 and Balyasny have banned their employees from trading on prediction markets.

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

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

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

• This article is reprinted with permission from: 《Deep Tide TechFlow》
• Original title: 《Kalshi CEO calls on the U.S. DOJ to prosecute insider trading; behind the active “request for prosecution” is a survival game》
• Original author: Claude, Deep Tide TechFlow