US regulator has renewed warnings over improper trading in prediction markets after two enforcement cases exposed how individuals misused privileged information while trading on KalshiEX. The Commodity Futures Trading Commission’s Enforcement Division issued an official advisory reminding traders and designated contract markets (DCMs) that insider conduct and fraud remain subject to full federal oversight.Political Candidate Traded on Own CampaignOne of the highlighted cases involved a political candidate who traded contracts tied to the outcome of his own election campaign. The trades surfaced in May 2025 through social media videos showing the candidate placing bets on KalshiEX.According to the watchdog, Kalshi’s compliance team contacted the individual the same day, and he admitted knowing the trading violated exchange rules. The platform imposed a $2,246.36 sanction, including disgorgement of profits and a five-year suspension from access.A second case from late 2025 involved an individual who traded prediction contracts linked to a YouTube channel while employed as an editor for that same channel. Investigators determined the trader likely used advance knowledge of upcoming videos for personal gain.Related: Coinbase Asks Courts to Bar States From Regulating Prediction MarketsKalshi imposed a $20,397.58 fine and suspended the trader for two years, citing violations tied to the misuse of material nonpublic information. Regulators described the activity as similar to insider trading, falling under the same legal prohibitions on misappropriation of confidential data obtained through a position of trust.CFTC Reiterates Oversight PowersWhile Kalshi handled these cases internally, the CFTC underlined that it retains full authority to prosecute illegal trading on any registered exchange. The advisory specifically referenced statutes covering insider trading, prearranged trades, wash sales, disruptive trading, and broader fraud and manipulation offenses.The Commission also reminded exchanges of their duty to maintain robust surveillance and enforcement programs, as required by the Commodity Exchange Act’s core principles.Read more: Prediction Markets Boom Draws CZ-Owned Trust Wallet, Joining MetaMask and Polymarket IntegrationCFTC Chair Michael Selig recently escalated a jurisdictional clash over prediction markets, directing the agency to intervene in ongoing court disputes and asserting that the US derivatives regulator, rather than state authorities, oversees event contracts.I have some big news to announce… pic.twitter.com/3OBNTaOnIL— Mike Selig (@ChairmanSelig) February 17, 2026In a video posted on X, he said the CFTC has filed an amicus brief to defend what he described as its “exclusive jurisdiction” over prediction markets, which he likened to derivatives markets.Selig warned that state entities challenging the CFTC’s authority over event contracts “will see” the agency “in court,” describing their actions as an “onslaught of state-led litigation.” He said the wave of enforcement activity has targeted platforms including Coinbase, Crypto.com, Kalshi and Polymarket. This article was written by Jared Kirui at www.financemagnates.com.

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