DOJ and CFTC bring insider trading charges involving event contracts

The United States Department of Justice (DOJ) announced the unsealing of a federal indictment charging Gannon Ken Van Dyke, an active-duty US Army soldier, with multiple felonies arising from his alleged use of classified information about a sensitive military operation to profit on Polymarket, a prediction marketplace.

In parallel, the Commodity Futures Trading Commission (CFTC) filed a civil complaint against Van Dyke in the same court. That action marks the first time the CFTC has charged insider trading involving event contracts and the first use of the “Eddie Murphy Rule” to bring charges based on the misuse of government information.

Taken together, the actions reflect key developments in the enforcement landscape for prediction markets and demonstrate that both the DOJ and the CFTC are using a range of legal tools to address alleged insider trading.

The alleged scheme

According to the indictment, Van Dyke was involved in the planning and execution of Operation Absolute Resolve, a military operation to capture former Venezuelan President Nicolás Maduro. In connection with his military service, Van Dyke signed non-disclosure agreements in which he promised to “never divulge, publish, or reveal by writing, words, conduct, or otherwise . . . any classified or sensitive information” relating to military operations.

Beginning around December 8, 2025, Van Dyke allegedly had access to sensitive, non-public, classified information about the operation. On or about December 26, 2025, he created and funded a Polymarket account and began trading on event contracts related to former President Maduro and Venezuela. In total, Van Dyke made approximately 13 bets between December 27, 2025 and the evening of January 26, 2026, all taking the “Yes” position on contracts such as:

• “U.S. Forces in Venezuela...by January 31, 2026”
• “Maduro out by...January 31, 2026”
• “Will the U.S. invade Venezuela by...January 31?”
• “Trump invokes War Powers against Venezuela by...January 31”

The indictment alleges that Van Dyke wagered approximately USD33,034 on these outcomes while in possession of classified, non-public information.

On January 3, 2026, the US apprehended former President Maduro and his wife, Cilia Flores, in Caracas, Venezuela. Hours later, President Donald Trump publicly announced the operation. Following the announcement, Polymarket resolved several Venezuela-related contracts to “Yes,” and Van Dyke allegedly profited approximately USD409,881. The indictment further alleges that Van Dyke moved most of his proceeds to a foreign cryptocurrency vault and into a newly created online brokerage account and took steps to conceal his identity, including requesting that Polymarket delete his account under false pretenses.

DOJ’s charges

The indictment charges Van Dyke with three counts of violating the Commodity Exchange Act (CEA), one count of wire fraud, and one count of an unlawful monetary transaction, reflecting the range of criminal statutes the DOJ may use to pursue insider trading in prediction markets.

• Commodities fraud under the CEA. CEA Section 6(c)(1) prohibits the use of any “manipulative or deceptive device or contrivance” in connection with any swap, futures contract, or contract of sale of any commodity in interstate commerce. CFTC Rule 180.1, promulgated under Section 6(c)(1) and modeled on Securities and Exchange Commission (SEC) Rule 10b-5, prohibits employing any device, scheme, or artifice to defraud; making material misstatements or omissions; or engaging in any act or course of business that operates as a fraud or deceit. The DOJ has previously criminally prosecuted insider trading in commodity markets under CEA Section 6(c) and Regulation 180.1.
  
  
• The Eddie Murphy Rule. CEA Section 4c(a)(3), sometimes referred to as the “Eddie Murphy Rule,” specifically prohibits federal agency employees, members of Congress, congressional employees, and judicial officers and employees from using non-public information derived from their positions to trade commodity futures, options, or swaps. Section 4c(a)(4) further prohibits these individuals from sharing non-public information with others for trades in commodity futures, options, or swaps and prohibits anyone from using such non-public information to enter into trades.
  
  
• Wire fraud. The DOJ also charged Van Dyke with wire fraud under 18 U.S.C. Section 1343. The DOJ has previously deployed the federal wire fraud statute to prosecute alleged insider trading in digital assets. The wire fraud charge in the Van Dyke case underscores the DOJ’s ability to pursue prediction market misconduct even where the applicability of traditional securities fraud statutes may be uncertain, given that most event contracts would not be considered securities.
  
  
• Monetary transaction involving criminally derived property. The indictment also charges an unlawful monetary transaction under 18 U.S.C. Section 1957 relating to Van Dyke’s alleged movement of illicit proceeds into the financial system.

Parallel CFTC civil action

Alongside the criminal case, the CFTC filed a civil complaint against Van Dyke in the US District Court for the Southern District of New York, alleging the same violations of the CEA and seeking restitution, disgorgement, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations.

Prior to the Van Dyke action, the CFTC’s engagement with insider trading in prediction markets had been limited to observing and publicizing platform-level self-policing. In February 2026, the CFTC’s enforcement division issued an advisory highlighting two instances of insider trading on Kalshi – one involving a political candidate who traded on his own election, and another involving an employee of a company affiliated with a YouTube channel who traded on related event contracts. Both instances were handled through Kalshi’s internal disciplinary processes. While the CFTC stated at the time that it had “full authority to police illegal trading practices” on regulated platforms, it had not publicly acted on any allegedly illegal trading practices on prediction markets.

On March 12, 2026, the CFTC issued a further advisory reminding designated contract markets (DCM) that CFTC regulations prohibit any person from employing “any device, scheme, or artifice to defraud or attempt to defraud any person or manipulate the price of any contract listed on a DCM,” including trading on confidential information in violation of a pre-existing duty of trust and confidence.

The Van Dyke complaint represents a more direct enforcement step in the CFTC’s emerging oversight of insider trading in event‑contract markets. The parallel CFTC action underscores the agency’s stated focus on insider trading risk in event contracts and related markets within its jurisdiction. During a March 31, 2026 speech, CFTC Director of Enforcement David I. Miller specifically cited insider trading in prediction markets as a priority for CFTC enforcement, and the Van Dyke case is consistent with that stated objective.

Implications and key takeaways

As the regulatory and enforcement landscape continues to evolve, market participants, prediction market platforms, and public companies are encouraged to consider:

• The DOJ’s enforcement toolkit. The indictment reflects that the DOJ is not relying solely on traditional securities fraud statutes to pursue insider trading in prediction markets.
  
  
• Application of CEA to prediction market contracts. The case could help determine whether prediction market event contracts qualify as swaps and fall within the scope of the CEA and the CFTC’s authority.
  
  
• Direct CFTC enforcement. The parallel civil action against Van Dyke signals that the CFTC could take direct enforcement action in appropriate cases.
  
  
• The evolving duty framework. The case presents an application of the misappropriation theory of insider trading, which applies when an individual owes a duty of trust and confidence to the source of the information. In this case, the allegations involve a government employee with non-disclosure obligations using classified information in breach of those obligations. However, the case highlights key questions about how the duty framework will apply to individuals with less formal relationships to information sources – such as political campaign volunteers, entertainment industry employees, or individuals who learn relevant information through informal relationships and who may not have formal confidentiality agreements. Although not directly applicable in this case, SEC Rule 10b5-2 was promulgated to outline duties of confidence, and it may provide a roadmap for the government’s expectations.
  
  
• Corporate policy updates and training. As a wide range of corporate events and activities could be the subject of event contracts, companies may face additional risk if employees or directors use non-public information to trade on prediction markets. Most public companies’ insider trading policies are designed to prevent securities trading while in possession of material non-public information and do not contemplate the use of broader non-public information by company insiders related to event contracts. Companies may wish to review and, where appropriate, revise codes of conduct, insider trading policies, and training materials to address event contracts and prediction market activity.

With these actions, the CFTC continues to use its authority to address illegal trading practices involving prediction markets, and the DOJ is pursuing criminal charges based on the alleged conduct. Companies and individuals who have not traditionally been exposed to commodities markets may wish to evaluate their policies, procedures, and compliance programs.

Learn more

For more information, please contact the authors.