CFTC Brings First Of Its Kind Insider Trading Action Against Prediction Market Trader For Maduro-Related Event Contracts Trading

On April 23, 2026, the U.S. Commodity Futures Trading Commission (the “CFTC” or the “Commission”) announced the filing of a civil enforcement action (the “Complaint”) against Master Sergeant Gannon Ken Van Dyke for alleged insider trading on Polymarket.com while “using classified nonpublic information regarding U.S. operations to capture former Venezuelan President Nicolás Maduro.”¹ The Complaint filed in the Southern District of New York asserts that Van Dyke misappropriated sensitive military planning information in breach of several duties of trust and confidence and traded on that information in violation of multiple Commodity Exchange Act (the “CEA”) antifraud and insider trading prohibitions and related rules.² The action reflects the CFTC’s first event contract insider trading charges and the first ever use of the specific prohibition on the misuse of government information (the so-called “Eddie Murphy Rule”). On April 23, 2026, parallel criminal charges against Van Dyke were also unsealed by the U.S. Attorney’s Office for the Southern District of New York.

Background, Allegations, and Theories of Liability

Prediction markets allow participants to buy and sell event contracts, which are contracts that pay out based on the occurrence or nonoccurrence of a specified future event.³ The CFTC has taken the position that event contracts are “swaps,” and, as such, are within the CFTC’s power to regulate under the CEA.⁴ According to the Complaint, Polymarket is a prediction market that facilitates event contract trades through a decentralized protocol.

The Complaint alleges that Van Dyke participated in planning and executing “Operation Absolute Resolve,” the mission to capture and arrest Maduro, while serving as a member of the U.S. Army’s Special Forces.⁵ As part of his involvement, Van Dyke received a “Classified Information Security Briefing,” executed a nondisclosure agreement, and had access to “Nonpublic Government Information” (the “NGI”) that was material and would “affect or tend to affect the price of a swap, namely event contracts related to Maduro and Venezuela[.]”⁶ The Complaint further alleges that, after receiving the NGI, Van Dyke bought shares in “Maduro Out” event contracts that resolved to “Yes” if “Maduro was removed from power for any length of time” either between January 1, 2025 and December 31, 2025, or between December 11, 2025 and January 31, 2026.⁷ As alleged, he realized more than $404,000 in profits on the latter contract.⁸

The CFTC alleges that Van Dyke conducted his event contract trading using information that he obtained due to his employment as a member of the U.S. Army Special Forces and which he subsequently misappropriated in violation of duties of trust and confidentiality arising primarily from the following sources:

• Nondisclosure Agreement. Van Dyke entered a nondisclosure agreement as part of the planned military operation which placed him in a position of “special confidence and trust,” and which obligated him to safeguard covered classified information.⁹
• Department of War Policies and Ethical Regulations. According to the Complaint, various Department of War policies and regulations provide that Van Dyke had a responsibility “to the United States Government and its citizens to place loyalty to the Constitution, laws, and ethical principles above private gain.”¹⁰ These policies also prohibited Van Dyke from engaging in financial transactions using nonpublic information and to further his own private interests.

The Complaint also indicates that the CEA’s prohibitions on the misuse of nonpublic governmental information (e.g., CEA Sections 4c(a)(3), 4c(a)(4)(C), and 6(c)(1) and Rule 180.1(a)(1), (3)) prohibited Van Dyke from using the NGI to enter into the event contract swap.¹¹

Based on the presented facts, the Commission asserts three distinct theories of liability under the CEA and CFTC regulations.

• First, the Complaint alleges violations of the CEA’s antifraud prohibitions contained in CEA Section 6(c)(1) and Regulations 180.1(a)(1) and (3) thereunder, which broadly prohibit the use of any “manipulative or deceptive device or contrivance”¹² or any act that “operates or would operate as a fraud or deceit”¹³ in connection with a swap.¹⁴ CFTC misappropriation of confidential information cases are typically pursued under these CEA antifraud prohibitions.
• Second, the Complaint alleges violations of CEA Section 4c(a)(3), which generally prohibits government employees or agents from using NGI in a “personal capacity and for personal gain”¹⁵ to enter into certain derivatives transactions, including a swap.¹⁶ This provision specifically makes it unlawful for any government employee (broadly defined) who has nonpublic information gained by virtue of such government employment to use the information in his/her personal capacity and for personal gain to enter into certain derivatives transactions, including swaps, where such information may affect or tend to affect the price of any commodity or swap, and which has not otherwise been publicly disseminated.
• Third, the Complaint alleges violations of CEA Section 4c(a)(4)(C)¹⁷, which prohibits the theft of nonpublic information from the government and use of such information in trading swaps or certain other transactions. This provision specifically makes it unlawful for any person to steal, convert, or misappropriate information held or created by any department or agency of the Federal Government, and to use such information to enter into a swap transaction, where such information may affect or tend to affect the price of any swap.¹⁸

This action reflects (i) the first application of the CEA’s standard insider trading and antifraud provisions to prediction market trading and (ii) the first application of the CEA’s prohibitions against the misuse of governmental information. The CFTC’s claims against Van Dyke thus reflect two important first-use cases for CEA enforcement.

DOJ Parallel Criminal Action

On the same day as the CFTC’s announcement, the U.S. Attorney’s Office for the Southern District of New York also unsealed an indictment against Van Dyke alleging criminal violations of the CEA and the wire fraud statute based on similar underlying facts alleged in the CFTC’s complaint.¹⁹

Enforcement and Regulatory Focus on Prediction Markets

The Van Dyke action follows a recent statement made by CFTC Director of Enforcement David I. Miller signaling increased enforcement attention on insider trading in prediction markets. In remarks delivered on March 31, 2026 at NYU Law School, Director Miller identified insider trading as a core enforcement priority and rejected the “myth” that insider trading law does not apply in prediction markets.²⁰He emphasized that “insider trading violates the [CEA] and our regulations’ anti-fraud provisions,” and stated that insider trading in prediction markets “is precisely the kind of serious violation that we are going after vigorously.”²¹ These remarks coincided with broader Commission activity in this area, including the issuance of an Advanced Notice of Proposed Rulemaking and a Staff Advisory from the Division of Market Oversight on March 12, 2026.²² Viewed together, the Van Dyke action and recent Commission statements demonstrate coordinated CFTC enforcement and policy attention to prediction market regulation and trading activity enforcement.

Key Takeaways

• Insider Trading on Prediction Markets is an Enforcement Priority. The Van Dyke action aligns with recent remarks by Director Miller emphasizing that insider trading is a core enforcement focus for the Commission and reinforcing the CFTC’s position that prediction markets are subject to the same rules as other derivatives markets. Market participants should expect continued regulatory and enforcement focus in this area.
• Insider Trading Risk for Organizations. Companies and institutions should review existing policies, procedures, trainings, and controls to ensure the risk of insider trading on prediction markets is appropriately addressed. The allegations in the Complaint highlight how duties of trust and confidentiality can give rise to insider trading exposure while trading event contracts. Providing reminders to employees of event contract trading risks may provide useful risk mitigation.
• Compliance Risk for Traders. Traders on prediction market platforms should take care to ensure they have a clear understanding of platform rules and CFTC regulations governing event contracts, including insider trading. The relatively low barrier to participation in prediction markets may increase the risk of inadvertent violations for more casual traders who fail to appreciate the implications of trading while in possession of potential confidential information related to the outcome of a particular event.
• Civil Enforcement Actions Involving National Security Information May Be Challenging. It will be interesting to see how the CFTC attempts to prove the circumstances of the misappropriation. While the Venezuela operation is obviously now public, circumstances surrounding the planning likely remain classified, and the Department of War may want them to remain so. In criminal cases, prosecutors and defense attorneys use the Classified Information Procedure Act (CIPA) to litigate matters related to classified information, but that statute does not apply to civil actions. The government will likely try to avoid the issue by attempting to stay the civil case and having the criminal action proceed first, but the sensitive nature of the circumstances of the alleged misappropriation may present opportunities for the defense in this first-of-a-kind action.
• In the criminal action, it will be interesting to see how the government attempts to prove the wire-fraud count. Wire fraud requires the obtaining of money or “property” by means of a scheme to defraud or false statements. Last year, the Second Circuit held that information did not qualify as “property” under the wire-fraud statute merely because a business deemed it confidential; instead the information must have “commercial value to the company” that owned the information to qualify as “property” for purposes of the statute. United States v. Chastain, 145 F.4th 282, 293 (2d Cir. 2025). Under Chastain then, it appears the government will need to attempt to show the pending operation in Venezuela somehow had “commercial value” to the U.S. government.

Footnotes

1. Press Release, Commodity Futures Trading Comm’n, CFTC Charges U.S. Service Member with Insider Trading in Nicolás Maduro-Related Event Contracts (Apr. 23, 2026); see also Compl. ¶ 9, CFTC v. Van Dyke, No. 1:26-cv-03369, ECF No. 1 (S.D.N.Y. Apr. 23, 2026).

2. Compl., supra note 1, ¶¶ 69, 79, 89.

3. See id. at ¶ 20.

4. Id. at ¶¶ 20–27.

5. Id. at ¶ 2.

6. Id. at ¶¶34–39.

7. Id. at ¶¶ 28, 29, 49–59.

8. Id. at ¶ 52.

9. Id. at ¶ 42.

10. Id. at ¶ 43.

11. Id. at ¶ 44.

12. 7 U.S.C. § 9(1).

13. 17 C.F.R. § 180.1(a)(1), (3) (2025).

14. Compl., supra note 1, at ¶¶ 60–70.

15. 7 U.S.C. § 6c(a)(3).

16. Compl., supra note 1, at ¶¶ 71–79.

17. 7 U.S.C. § 6c(a)(4)(C).

18. Compl., supra note 1, at ¶¶ 80–89.

19. Press Release, Dep’t of Justice, U.S. Soldier Charged With Using Classified Information To Profit From Prediction Market Bets, (Apr. 23, 2026).

20. Public Statements & Remarks, CFTC, Remarks at NYU Law School – CFTC Enf’t Priorities, Insider Trading in the Prediction Markets, and Coop. with the CFTC (Mar. 31, 2026), www.cftc.gov/PressRoom/SpeechesTestimony/opamiller1.

21. Id.

22. Press Release, Commodity Futures Trading Comm’n, CFTC Seeks Public Comment on Advanced Notice of Proposed Rulemaking Relating to Prediction Markets (Mar. 12, 2026), https://www.cftc.gov/PressRoom/PressReleases/9194-26; Press Release, Commodity Futures Trading Comm’n, CFTC Staff Issues Prediction Markets Advisory (Mar. 12, 2026), https://www.cftc.gov/PressRoom/PressReleases/9193-26.

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