Polymarket insider trading cftc michael selig interview

Over the better part of the past year, prediction markets appeared to be entering a new era of rampant fraud. On Polymarket, traders walked away with massive profits from suspiciously timed wagers on high-stakes geopolitical events, ranging from the raid on Venezuela to potential war with Iran. For months, it remained unclear whether U.S. officials would even pursue the most blatant bad actors: Polymarket’s crypto-based platform is technically registered offshore, and operates without U.S. regulation or licensing.

Now, however, the U.S. Commodity Futures Trading Commission (CFTC)—the federal body that oversees prediction markets—is making clear it is watching the space extremely closely. The agency is actively hunting for suspicious activity from U.S.-based traders who evade geoblocks to access offshore platforms like Polymarket’s crypto exchange via virtual private networks. “We're going to find them, and we're going to bring enforcement actions,” CFTC chair Michael Selig told WIRED this week during an interview at the agency’s Washington, D.C. headquarters.

Selig says the CFTC, which currently operates with a relatively lean workforce, is expanding its team to handle the growing workload. Like many other organizations that have integrated AI into core operations, the agency is also leaning on automation to keep up with demand, including tools that analyze trading patterns and flag potential market manipulation. “There’s such an enormous volume of data out there,” Selig said. “When we feed that data into AI, it generates really valuable insights. It can help us figure out where we should launch investigations, or when we need to send a subpoena to a trader.”

Beyond custom surveillance systems built in-house, the CFTC’s enforcement toolkit includes third-party blockchain tracing tools like Chainalysis for crypto platforms, and market abuse detection software such as Nasdaq Smarts for centralized markets. Aside from naming Nasdaq Smarts, the agency declined to disclose its full roster of AI tools or share more specific examples of the technology it uses.

Major prediction market operators have recently begun publicizing their own efforts to root out bad actors. Kalshi, Polymarket’s primary U.S.-based competitor, has openly announced it has suspended and penalized customers flagged for insider trading and market manipulation.

In April, after widespread backlash over suspected insider trading on its platform, Polymarket announced its own partnership with Chainalysis as part of a broader crackdown on manipulation. While Polymarket CEO Shayne Coplan previously argued that insider trading could actually benefit prediction markets, the company shifted its approach this spring: it updated its official market integrity rules, and announced a separate partnership with Palantir to oversee its U.S.-based sports prediction markets (the Chainalysis deal applies exclusively to its offshore platform). Polymarket did not respond to WIRED’s request for comment for this story.

Chainalysis spokesperson Maddie Kenney noted that the company analyzes the same core dataset for both its private and regulatory clients. “The value Chainalysis adds for our customers, including Polymarket and the CFTC, is organizing raw data and enriching it with the attributions and insights we’ve accumulated over years working in this space,” she said. The arrangement has certainly proven beneficial for Chainalysis itself.

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The CFTC’s promise to crack down on insider trading comes at a moment of intense congressional scrutiny for prediction markets. In March, Connecticut Senator Chris Murphy told WIRED he suspected White House staffers were conducting insider trading via war-related prediction contracts. In early April, seven members of Congress called on the CFTC to investigate offshore platforms that offer contracts tied to war-themed events. In their formal letter, the lawmakers argued the CFTC has both the authority and responsibility to curb insider trading, particularly for what they labeled “morally obscene” wagers on military action. Selig recently told Congress the agency is already following up on “hundreds, if not thousands” of insider trading tips related to prediction markets.

Investigations are not limited to federally regulated exchanges, either. “We’re surveilling markets on a global basis,” Selig told WIRED.

Selig confirmed the CFTC will assert extraterritorial jurisdiction—its legal authority to enforce U.S. laws beyond national borders—when it uncovers suspicious activity on offshore platforms like Polymarket, though he noted the agency takes a case-by-case approach to such actions. “We only use this authority in extreme circumstances,” he said, adding the agency weighs whether charges are likely to hold up in court before moving forward. “In any extraterritorial litigation, our authority will be challenged, and those challenges could hurt our ability to bring cases down the line.” According to Selig, the 2010 Dodd-Frank Act gives the CFTC more flexibility to pursue these kinds of enforcement actions by expanding its authority over foreign swap activities that impact the U.S. When appropriate, the agency also collaborates with regulators in other countries. “For cases where we’re not sure we’ll win, or it’s less our area of expertise and more a matter for foreign regulators, we pass it along to them,” he said. “We’re constantly referring cases.” The agency declined to specify which cases it has referred to international partners.

To date, only one person has been charged with prediction market-related insider trading in the U.S. On April 23, federal agents arrested a U.S. Army Special Forces soldier for trades he placed on Polymarket last year tied to the capture of former Venezuelan leader Nicolas Maduro. After the arrest, Polymarket claimed it had flagged the suspicious trade to U.S. authorities.

Selig stressed that the CFTC’s crackdown is only just getting started. The agency will track down wrongdoers, he said, no matter “how large or how small” they are.

Update 5/15/26 2:15pm ET: This story has been updated to reflect the location of the CFTC's headquarters.