Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
CFTC Fines Gabriel Perez for Prediction Market Insider Trading
August 28, 2026 | NCFA Market Activity + Insight | Capital Markets And Market Infrastructure, Risk Compliance And Regtech, Regulation And Policy, Wealthtech Investing And Trading
Federal Enforcement Puts Event Contract Surveillance Under Scrutiny
On August 28, 2026, the Commodity Futures Trading Commission penalized Gabriel Perez for prediction market insider trading after finding that he used confidential presidential speeches to trade event contracts for his own benefit. Perez worked as a White House technical adviser and teleprompter operator, which gave him access to prepared remarks before President Donald Trump delivered them.
Perez generated US$107,539.02 in profits by trading contracts on words and phrases the President would mention. He must return those profits, pay a US$65,000 civil penalty, stop violating the Commodity Exchange Act and stay out of CFTC regulated trading for three years. Perez consented to the settlement without admitting the CFTC's findings or legal conclusions, and the Commission says his cooperation justified a substantial reduction in the civil penalty. The CFTC also thanked KalshiEX for assisting the investigation.
As event contracts attract more volume, products and mainstream distribution, exchanges need to do more than price outcomes and settle trades. They need credible ways to identify when someone may know the answer before everyone else.
Perez Used Advance Speech Access to Trade 14 Markets
A mention market lets traders take a Yes or No position on whether a word, phrase or term will appear during a defined event. Perez opened his Kalshi account on December 8, 2025 and traded markets tied to presidential speeches, including addresses, rallies, policy remarks and the State of the Union.
The CFTC order says Perez generally saw prepared remarks about an hour before the President spoke. He bought Yes contracts when the target word appeared in the speech and No contracts when it did not. On one occasion, he changed his position after watching the President skip part of the prepared text.
Perez traded across 14 presidential mention markets and made money on 39 of 43 contracts. He was not making a better forecast than other traders. He had already seen the prepared remarks and knew whether many of the words being traded were present.
Event Contracts Create Different Insider Risks
Traditional financial markets already deal with executives, advisers and employees who may hold valuable information before investors receive it. Event contracts can create a much wider group of people with direct knowledge of an outcome. A political speech can involve writers, production staff, government employees and technical crews, while sports, entertainment and corporate events can involve players, coaches, producers, employees, advisers or others close to the result.
That risk was visible before federal enforcement arrived. Kalshi's earlier insider trading cases included a MrBeast editor and a California political candidate, and the exchange said it had opened roughly 200 investigations or probes. Those cases showed that integrity work was already becoming part of running an event market. The Perez action is more consequential because the CFTC is now applying federal commodities law directly to misuse of confidential information in prediction market contracts.
The integrity problem can also extend beyond advance knowledge. Some traders may know an outcome early, others may be able to influence it, and some may hold information through a public duty or private relationship. That makes the source of the information as important as the trade itself.
See: Should Prediction Markets Trade On Disasters?
The CFTC order and what the public record shows is that investigators could connect Perez's account, government role, speech access, trading times and profits. For prediction markets, knowing who is behind an account matters as much as spotting an unusual trade.
Prediction Market Surveillance Needs More Than Trade Alerts
Traditional surveillance remains important. Exchanges can look for unusual profits, concentrated positions, repeated success, trading immediately before an event and activity that doesn't fit a customer's normal behaviour. Prediction markets add another requirement because suspicious trading may only make sense once the account is connected to a job, relationship or source of access outside financial markets.
A trader repeatedly winning presidential speech contracts becomes far more interesting if the exchange or regulator also knows that person works on presidential events. The same logic applies to sports personnel trading injury or lineup contracts, employees trading corporate outcomes or production staff trading entertainment events.
See: CRSHMARKET Launches Livestream Prediction Markets
Exchanges need to know who is trading, what access they may have to the event and whether their trading pattern fits that access. Reliable customer identity, account history and information about relevant jobs or relationships can help investigators decide whether an unusual trade deserves a closer look. Surveillance teams need tools that can connect trading patterns with occupations, relationships and event access. Case management, alert review and auditable investigation records become more important as the number of contracts and traders grows.
This boosts the commercial case for regulated event contract infrastructure. Market surveillance, identity controls, outcome verification, compliance workflows, investigation tools and regulator reporting are becoming part of what platforms need to operate credible markets, alongside matching, pricing and settlement.
Different contracts also require different surveillance assumptions. An inflation contract settles on a formal public release. A presidential mention contract may depend on a speech seen by staff shortly before delivery. A sports contract can depend on injury or lineup information known to a relatively large group before the public learns it. Exchanges need to understand how each event is produced, who may know the answer early and who can influence the result before they can decide what suspicious trading looks like.
Mainstream Distribution Raises the Integrity Stakes
Prediction markets are reaching customers through larger financial platforms, which brings more liquidity but also more accounts and more activity to monitor. Recent CSA and CIRO guidance on prediction markets keeps sports and entertainment event contracts outside Canada's securities dealer channel, while Wealthsimple Investments and Interactive Brokers Canada can offer a narrower set of economic, environmental and financial contracts under CIRO conditions.
The CFTC case also shows that regulators are prepared to use existing commodities rules when confidential information is abused. Exchanges and distributors therefore need to spot suspicious activity early, connect it to useful account information, investigate it and keep records that can support enforcement.
That creates a practical market for surveillance, identity, behavioural analytics and case management tools. Prediction markets have already proved they can attract products, liquidity and mainstream distribution, but can market integrity keep up.
Talking Point
Can prediction markets scale faster than their ability to detect who knows the outcome before everyone else?
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