Classified Intel, Crypto And A Special Forces Sergeant: The CFTC’s First Insider Trading Case In Prediction Markets

After previous repeated warnings to market participants that it was monitoring prediction markets for insider trading and manipulation,¹ the Commodities Futures Trading Commission (CFTC or Commission) sent a clear message on April 23 that insider trading will not be tolerated in prediction markets. The Commission brought its first case charging insider trading in prediction markets.

The CFTC charged active-duty US Army Special Forces Master Sergeant Gannon Ken Van Dyke on April 23, 2026, with fraud and manipulation, insider trading by a government employee, and theft and misappropriation of nonpublic government information, alleging that Van Dyke used classified nonpublic government information to trade on an overseas prediction market. The CFTC filed its complaint the same day a parallel criminal indictment was unsealed by the US Attorney’s Office for the Southern District of New York, charging Van Dyke with unlawful use of confidential government information, theft of nonpublic government information, commodities fraud, wire fraud, and engaging in a monetary transaction in property derived from unlawful activity.

While the CFTC’s pace of new enforcement actions has slowed over the last fiscal year, these charges come as no surprise to those who have been monitoring recent statements by the CFTC and the Department of Justice (DOJ). US Attorney Jay Clayton also previously indicated his office was focused on wrongdoing in prediction markets,² and Director of Enforcement David Miller, in keeping with his warnings to market participants that insider trading is prohibited in prediction markets,³ indicated that his work is not close to being over, warning market participants that the CFTC “will continue to be vigilant in policing the illegal use of inside information in the prediction markets and other markets within the CFTC’s jurisdiction.” 

Venezuela Operation and Overseas Prediction Markets

The CFTC and DOJ alleged that Van Dyke was involved in the planning and execution of the US military operation to capture former Venezuelan President Nicolás Maduro and his wife, Cilia Flores (Venezuela Operation), and in connection with his assignment, Van Dyke signed a nondisclosure agreement in which he agreed never to “pulge, publish, or reveal by writing, word, conduct, or otherwise, to any unauthorized person, any classified or sensitive information” relating to the operation. 

According to the DOJ, in late December 2025, after unsuccessfully attempting to open an account at a CFTC-regulated designated contract market that offered Venezuela-related event contracts, Van Dyke turned to an overseas prediction market, used a virtual private network service, and connected through an exit node geolocated to a foreign country. Just days before the Venezuela operation, Van Dyke placed 13 trades while in possession of material nonpublic information (MNPI) about the US’s pending nonpublic operation, all taking the “Yes” position on Maduro- and Venezuela-related contracts. After the Venezuela Operation, the contracts resolved with Van Dyke profiting approximately $409,881 across all of his trades.

Following his successful trading, Van Dyke allegedly attempted to conceal his proceeds and identity, transferring the majority of his winnings to a foreign cryptocurrency “vault,” then moving funds to his cryptocurrency exchange account and, from there, to a newly created brokerage account. He allegedly also asked the overseas prediction market to delete his account, falsely claiming he had lost access to the associated email address, and changed the email registered to his exchange account to an email not subscribed in his name. 

Key Takeaways and Looking Forward

Unsurprisingly and consistent with the CFTC’s position in other active litigation,⁴ the CFTC’s complaint reiterates its view that event contracts listed and traded on prediction markets are “swaps” within its regulatory jurisdiction under the Commodity Exchange Act (CEA). However, the Commission did break new ground in bringing charges for the first time under CEA Sections 4c(a)(3) and 4c(a)(4)(C), which were added by the Dodd-Frank Wall Street and Consumer Protection Act in 2010 to prohibit the misuse of nonpublic government information in commodity and derivatives markets. 

This case serves as a reminder about the broad scope of the CFTC’s investigative and charging authority and underscores the CFTC’s ability and willingness to trace trading activity conducted through blockchain-based platforms, even when traders attempt to obscure their identities and locations. 

Indeed, CFTC Enforcement Director David I. Miller has indicated that one of his key enforcement priorities is prosecuting entities that knowingly violate their Anti-Money Laundering (AML) or Know Your Customer (KYC) compliance obligations. While no charges were filed against the overseas predication market, the type of conduct Van Dyke engaged in seems squarely within the scope of conduct Director Miller hopes to curtail by reminding firms of their obligations to take their AML and KYC compliance obligations seriously.

The coordination between the CFTC and the DOJ also signals that insider trading in prediction markets is a priority for both agencies, and any such conduct, especially related to high-profile events, will continue to attract a multi-agency enforcement response, with the real possibility of both civil monetary penalties and criminal exposure for those found to have broken the law. 

Footnotes

1. See Katten’s coverage of CFTC Advisory on Enforcement over Event Contracts here.

2. See Katten’s coverage of US Attorney Jay Clayton’s remarks here.

3. See Katten’s coverage of CFTC Enforcement Director David Miller’s remarks here.

4. See Katten’s coverage of prediction markets litigation here.

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