The CFTC and DOJ Predict Insider Trading Convictions for Event Contract Participants

Operation Absolute Resolve: Nicolas Maduro

In the predawn hours of January 3, 2026, United States special forces flawlessly executed Operation Absolute Resolve by descending into Caracas, Venezuela and apprehending Nicolas Maduro and his wife, Cilia Flores. Maduro was then transported to the USS Iwo Jima. At about the same time, Master Sergeant Gannon Ken Van Dyke uploaded to his Google account a photo of himself, in uniform and carrying a rifle, alongside three other soldiers, on the deck of a ship at sea, at sunrise. Van Dyke had just earned $410,000 from some well-timed “Maduro bets,” recently purchased Polymarket event contracts, or so he thought.

DOJ and CFTC Sue

Now Van Dyke is looking down the barrel of two well-coordinated but separate criminal and civil prosecutions by the U.S. Department of Justice (“DOJ”) and the Commodity Futures Trading Commission (“CFTC”), for among other things, insider trading.These cases are a watershed moment for the burgeoning prediction markets and mark the first criminal prosecution.[1]

Relevant Facts

Van Dyke created a Polymarket account on December 26, 2025.From December 27 until about 10 PM on January 2, 2026, at a cost of $32,934, Van Dyke purchased “YES” event contracts (or shares) that would pay out in the cryptocurrency USDC.e if, for example, Maduro was removed from power in Venezuela by January 31, 2026.Over ninety percent of Van Dyke’s shares were purchased on January 1st and 2nd, just hours before the removal of Maduro; at the time, the market assessed the likelihood of a “YES” event occurring at between 4% and 8%.

Van Dyke was assigned to U.S. Army’s Special Operations Command (“USASOC”) and was involved in the planning and execution of Operation Absolute Resolve.At the heart of each of the DOJ and CFTC’s case is the allegation that Van Dyke misappropriated classified, nonpublic U.S. Government information to make illegal profits.He was subject to at least two explicit nondisclosure agreements. The government alleges that Van Dyke breached his duty of trust and confidence to the source of the information and violated specific commitments Van Dyke had made to the United States regarding the use of that information.

The Charges

Consequently, he is charged with five criminal counts: (a) unlawful use of confidential government information for personal gain; (b) theft of nonpublic government information; (c) commodities fraud; (d) wire fraud; and (e) engaging in a monetary transaction in property derived from specified unlawful activity.

The CFTC’s position is that event contracts are derivatives and swaps subject to the exclusive jurisdiction of the CFTC pursuant to the Commodity Exchange Act (“CEA”).[2]The CFTC’s complaint alleges, among other things, that Van Dyke violated Section 6(c)(1) of the CEA as well as Regulation 180.1(a), patterned after Section 10(b) and Rule 10b-5 under the Securities Exchange Act of 1934.

Conclusion

Supervised persons of investment advisers and other financial professionals need to beware of running afoul of their fiduciary duty and confidentiality obligations, as well as possibly insider trading and related laws, not just with respect to securities, but also in the prediction markets governed by the CFTC and subject to the criminal laws of the United States.An accusation of insider trading, misappropriation or wire fraud, no matter the asset, is a potential source of reputational risk or worse for any financial institution.This should potentially be the subject of training and/or restrictions at RIAs, broker dealers and other institutions.Compliance professionals should also consider how prediction markets are addressed in codes of conduct and other policies and procedures. Compliance should also consider how, to what extent and under what conditions employees may participate in prediction markets.Should they be prohibited? Should they require preclearance? Should they be subject to periodic written attestations? Compliance also should consider the need to be on watch for aberrational trading patterns.Van Dyke did not frequently trade but when he did he spent over one-third of a year’s salary largely within 48 hours of a triggering event.This level of conviction and the size of the investment is unusual and should probably trigger red flags.

The cases against Van Dyke are novel, but likely the first of many to come.The CFTC’s Director of Enforcement, David Miller, recently emphasized that prevention of insider trading in the prediction markets is an important priority.[3] The United States Attorney for the Southern District of New York, Jay Clayton, recently made similar remarks at the 2026 Securities Enforcement Forum.[4] Stay tuned to Orical’s regulatory updates to stay informed.

[1] See DOJ Press Release, U.S. Soldier Charged With Using Classified Information To Profit From Prediction Market Bets (Apr. 23, 2026).See Indictment, U.S. v. Van Dyke, No. 1:26-cr-00156 (S.D.N.Y. Apr. 23, 2026); See CFTC Press Release and related Complaint, CFTC v. Van Dyke, No. 26-cv-3369 (S.D.N.Y. Apr. 23, 2026).

[2] See CFTC Reaffirms Exclusive Jurisdiction over Prediction Markets in U.S. Circuit Court Filing (February 17, 2026).See also CFTC Enforcement Division Issues Prediction Markets Advisory (February 25, 2026)

[3] See Remarks at NYU Law School – CFTC Enforcement Priorities, Insider Trading in the Prediction Markets, and Cooperation with the CFTC (March 31, 2026).

[4] See U.S. Attorney Jay Clayton’s Keynote Panel at the Securities Enforcement Forum New York 2026 (February 5, 2026).