The new head of enforcement at the Commodity Futures Trading Commission (CFTC) has issued a stark reminder to traders seeking to take advantage of insider information in comments made at New York University on Tuesday.
In his first public remarks since taking the role, David Miller said: “We are aware of the speculation about insider trading. We are watching.” The warning comes after a number of well-timed trades on geopolitical news items led to speculation about the parsing of illegal information in the upper echelons of the U.S. government.
Insider trading one of several pillars of focus for CFTC
The comments reflect a sharper stance from the CFTC, suggesting regulators plan to apply existing market abuse and oversight rules to platforms such as Kalshi and Polymarket. Miller said the agency would take a focused approach to enforcement rather than a broad crackdown with the aim of distinguishing between systemic misconduct and lower-level infractions.
Miller added the CFTC will concentrate on a core set of enforcement priorities, including market abuses such as spoofing, a practice in which traders place orders they do not intend to execute to mislead others about supply or demand, as well as deliberate violations of anti-money laundering laws.
The commission will also encourage businesses and authorities to come forward with any information that exposes employees in its investigations. Miller said: “Cooperation in our view is binary: you’re either in or you’re out. That means robust, full cooperation.” Those entities that do cooperate would pay less in any penalties, he confirmed.
Meanwhile, it emerged yesterday that federal prosecutors in Manhattan were investigating whether a series of high-profit wagers on prediction platforms may have breached insider trading and other laws.
Officials leading securities and commodities fraud cases at the U.S. attorney’s office for the Southern District of New York recently met with representatives of Polymarket to discuss how existing statutes could apply to potential misconduct in the rapidly expanding sector.
Energy market trades to face stricter scrutiny
Miller also said the CFTC is prioritizing enforcement against manipulation in energy markets, warning that price swings can have direct consequences for consumers.
“Drivers still need fuel regardless of price,” Miller said, noting that households have little flexibility when costs rise.
Oil markets have been especially volatile in recent weeks amid tensions involving Iran. U.S.-regulated crude futures drew scrutiny after a large, roughly $500 million position was placed only 15 minutes before President Donald Trump announced a five-day delay in planned strikes on Iranian energy infrastructure, a move that triggered a sharp drop in prices.
The timing of the trade has raised questions among market observers about potential foreknowledge of policy decisions. Miller declined to comment on whether the agency has opened a formal investigation.
While these trades were not made on any prediction market platform, experts argue it does bring into sharper focus the attitude of the federal government to insider trading.
Andrew Verstein, an expert in insider trading at UCLA School of Law, opined: “It looks deeply suspicious,” adding the patterns reflect what you “would expect to see if there were informed trading by government officials and their friends.”
Legal battle rages on between prediction markets and state governments
There are mounting cases against the sector across the US, with several states arguing platforms resemble unregulated gambling rather than legitimate financial trading. Regulators also contend that event-based contracts, especially those tied to elections or public outcomes, fall outside traditional derivatives oversight and raise consumer protection and jurisdictional concerns.
In recent developments, Washington State Attorney General Nick Brown said it was suing Kalshi for violating its anti-gambling laws, adding to a list of legal woes facing the company. In a filing at the King County Superior Court, the largest trial court in Washington state, Brown called the business “a bookie with a fancy name.”
He added: “They publicly pat themselves on the back for being sneaky and getting around Washington’s gambling laws, but it’s worse than being sneaky. It’s a lie, and it’s illegal.
“Do we want everything to be gambling? Do we want to be an America that goes from worrying about the human cost of war to betting on the over/unders of that war? What else would we lose about ourselves if the whole world became a craps table?”
Elsewhere, Utah lawmakers are advancing legislation aimed at curbing prediction platforms like Kalshi and Polymarket by focusing on restrictions around sports proposition-style wagering.
In total, a recent legal analysis found “more than 30 active cases” involving prediction markets across the U.S., spanning state enforcement actions, federal jurisdiction disputes, and class actions.
Increased prediction market oversight an inevitability
As scrutiny intensifies from both federal regulators and state authorities, prediction markets are entering a pivotal phase that could determine how, or whether, they fit within existing financial and legal frameworks.
The CFTC’s sharpened focus on insider trading and market manipulation suggests regulators are unlikely to give emerging platforms a regulatory pass as they grow.
With more than 30 active cases and parallel investigations underway, the coming months are expected to test the boundaries between innovation and enforcement. For traders, platforms and policymakers alike, the message is becoming obvious that increased oversight is not a question of if, but when.
