CFTC bars George Santos from prediction markets after Kalshi SOTU trading order
A separate SDNY Polymarket defendant is asking to dismiss CEA counts by arguing event contracts are not clearly “swaps.”
The US Commodity Futures Trading Commission ordered former Rep. George Santos to pay $35,070 and accept a three-year ban on prediction-market trading over Kalshi contracts tied to his own 2026 State of the Union attendance. In a separate Southern District of New York case, a Polymarket defendant moved to dismiss Commodity Exchange Act-based charges, arguing the law is ambiguous when applied to event contracts.
Key Takeaways
- The Commodity Futures Trading Commission ordered George Santos to pay $17,500 in civil penalties and $17,570 in disgorgement and barred him from prediction-market trading for three years over Kalshi contracts tied to his 2026 State of the Union attendance.
- In the Southern District of New York, Gannon Ken Van Dyke pleaded not guilty and moved to dismiss three Commodity Exchange Act-based counts, arguing event contracts are not clearly covered as “swaps,” undermining fair notice.
- Prosecutors allege Van Dyke made more than $400,000 on Polymarket using nonpublic information tied to a January operation involving the removal of Venezuela’s Nicolás Maduro.
- Also in SDNY, Michelle Bond asked the court to exclude evidence tied to husband Ryan Salame’s 2023 guilty plea and related plea materials in her campaign-finance case.
CFTC’s Santos Order Puts “Manipulation-by-Posting” on the Record for Event Contracts
The Commodity Futures Trading Commission’s order against former New York Rep. George Santos is small in dollars and big in theory, because it treats public posting that moves an event-contract price as the core misconduct rather than a side detail.
The CFTC ordered Santos to pay a $17,500 civil monetary penalty and $17,570 in disgorgement, for a total of $35,070, tied to trading on Kalshi event contracts that referenced his appearance at the 2026 State of the Union address in Washington, DC. The order also bars Santos from trading on prediction-market platforms for three years.
The agency’s conduct description is unusually direct about the mechanism. “While buying and selling positions in this market, Santos posted on social media about his plans to attend or not attend the SOTU,” the CFTC said. “In his social media posts, Santos made a series of material misrepresentations and omissions about whether he would attend the SOTU. After these posts, the SOTU contract prices moved in a direction that was favorable to Santos’ positions which allowed him to make over $17,500.”
Santos’ broader criminal history sits in the background but is not the legal hook for the CFTC order. He was expelled from Congress in 2023, and he was sentenced to 87 months in prison for wire fraud and aggravated identity theft in 2025, serving three months before US President Donald Trump commuted the sentence.
Polymarket’s SDNY Test: Can Prosecutors Use the CEA When “Swap” Status Is Disputed?
If the Santos order is about civil conduct standards on thin, self-referential markets, the Polymarket case in the US District Court for the Southern District of New York is about whether federal prosecutors can anchor criminal counts to the Commodity Exchange Act when the underlying product category is still being fought over.
Gannon Ken Van Dyke, a US soldier charged in April, is accused of making more than $400,000 on Polymarket event contracts using nonpublic information tied to a January military operation involving the removal of Venezuelan President Nicolás Maduro. The US Justice Department has said Van Dyke was involved in the operation and allegedly used insider information to bet on whether Maduro would be removed from power.
Van Dyke has pleaded not guilty to all charges. In a Friday filing in SDNY, his legal team submitted a 51-page memorandum supporting a motion to dismiss the indictment on multiple legal theories, including a direct attack on the Commodity Exchange Act’s fit for event contracts.
The motion targets three charges that rely on the CEA, arguing the statute is “ambiguous” in treating event contracts as “swaps,” and that this ambiguity defeats fair notice. The memo frames the issue as a definitional gap with real criminal consequences: “If Congress, executive branch agencies, and courts all find the ‘swap’ definition ambiguous, how can ordinary citizens have fair notice that prediction market wagers are covered by the CEA?” the filing said. “They cannot.”
That argument lands against a competing institutional posture. The filing notes that the CFTC, under Chair Michael Selig, has claimed “exclusive jurisdiction” over prediction markets on the basis that event contracts are treated as “swaps.” The SDNY court does not need to resolve the entire jurisdictional debate to decide the motion, but any ruling that narrows the CEA theory would change the enforcement playbook for event-contract cases that prosecutors want to frame as derivatives crimes.
A schedule filed in June put Van Dyke on a tentative trial track beginning in late 2026 or early 2027, but the timing remains procedural and subject to change.
FTX’s Legal Tail: Bond Tries to Keep Salame’s Guilty Plea Out of Her Campaign-Finance Trial
Separate from prediction markets, SDNY is still working through the remaining criminal cases tied to the collapse of FTX in 2022, and one of the live disputes is not about whether a contribution happened but what the jury is allowed to hear about the person closest to it.
Michelle Bond, who ran unsuccessfully for Congress in New York in 2022, faces campaign-finance charges alleging her campaign was partially funded by contributions from FTX facilitated by her husband, former FTX Digital Markets co-CEO Ryan Salame. Salame is serving a 90-month sentence after pleading guilty in 2023.
In a Friday filing, Bond’s legal team asked the court to preclude evidence related to Salame’s guilty plea and “related plea materials,” including admissions that he made “political contributions in [his] name that were funded by transfers from the bank accounts” of an entity tied to FTX.
“The Court should preclude the government from introducing or referring to Mr. Salame’s guilty plea or any related plea materials, because their minimal probative value is substantially outweighed by the risk of unfair prejudice to Ms. Bond,” the filing said. Bond’s lawyers also argued: “[...] Mr. Salame’s plea materials lack any probative value as to Ms. Bond’s guilt, knowledge, or intent. Mr. Salame’s plea is an admission of his own guilt, not evidence of Ms. Bond’s state of mind or participation in any charged offense.”
Bond’s motion also asked the court to include information related to her “contemporaneous divorce and custody proceedings,” arguing that although she and Salame were not married at the time of the alleged crime, Salame was not an “ordinary ‘individual’ donor” to her campaign.
What Comes Next for Prediction markets face legal heat. FTX
Two SDNY rulings are now the near-term catalysts: the court’s decision on Bond’s request to preclude Salame’s plea materials, and the court’s decision on Van Dyke’s motion to dismiss the CEA-based counts.
On the prediction-market side, the next procedural markers in Van Dyke’s case matter as much as the headline allegations, because the schedule is still described as tentative. Any updated scheduling order, hearing date, or briefing deadline will clarify whether the late-2026/early-2027 trial window is holding.
The other thread to watch is whether the CFTC adds further public statements or filings that sharpen its view that event contracts are “swaps” within its exclusive jurisdiction, particularly if that position is cited or contested in the Van Dyke docket.
Finally, platforms themselves may respond before courts do. Enforcement attention that centers on manipulation-by-public-statements and alleged nonpublic-information trading creates incentives for prediction-market venues to adjust trading rules, market design, or access controls, even without a new statute or a final SDNY ruling.
How Traders Should Read This Week’s Signals for Kalshi/Polymarket Access and Conduct Risk
The Santos order is being read as a one-off about a notorious figure, but the procedural detail that matters is the CFTC’s theory of harm: it is willing to treat a trader’s public statements that move an event contract as actionable “material misrepresentations and omissions,” which is a much tighter conduct standard than the market’s usual shrug at “posting.” The threshold that matters is whether platforms and regulators start treating self-referential markets, where the trader can influence the outcome narrative, as inherently higher-risk venues that justify bans and access restrictions.
Van Dyke’s motion is the other edge of the same blade. The real test is whether SDNY accepts that the Commodity Exchange Act is too ambiguous to support CEA-based criminal counts when “swap” status is disputed, because if that argument holds, the setup starts to look like a jurisdictional bottleneck rather than a broad green light for prosecutors to treat prediction-market wagers as derivatives crimes. What would make this week’s cluster matter in practical terms is a court ruling that either narrows the CEA theory for event contracts or forces platforms to harden rules around posting-driven price moves and information asymmetry.
