US Lawmakers Probe Prediction Markets After Suspicious Pre-News Bets Raise Fears of Insider Misuse
Polymarket and Kalshi are now under pressure as Congress starts an insider trading probe. Lawmakers want to monitor how prediction markets handle sensitive information closely.
The US House Committee on Oversight has opened the investigation as Chairman James Comer sent letters to both companies. He has asked for details about their systems and rules as officials want to know how these platforms stop insider trading risks.
Congress Opens Probe Into Prediction Markets
The issue gained attention after reports of strange betting activity over the last few months. Some users placed big bets before important news became public. These bets were linked to events like tensions with Iran and major political decisions. The timing of the bets raised serious doubts about fair trading.
Lawmakers believe some people may have used private information to make profits. There is also a growing concern that government officials or insiders are using such data. Congress now wants clear answers from both companies.
Prediction markets like Polymarket and Kalshi have grown fast. These platforms let people bet on real-world events. These include elections, wars, and economic changes. Supporters say they help predict outcomes better. Critics say they can be misused for insider trading.
Companies Defend Their Trading Policies
Both companies say they follow strict rules. Polymarket updated its policies earlier this year. It focused on stopping suspicious trades. Kalshi also made changes. It stopped politicians from betting on their own elections.
Polymarket said it has a strong system to keep markets fair. The company also said it will work with Congress. Kalshi shared a similar response. It said it has strong checks to prevent insider trading.
A recent legal case has added more pressure. A US staff sergeant was charged with using secret information. He used it to trade on Polymarket. Reports say he made over $400,000 before the news became public.
Insider Trading Case Raises Bigger Concerns
This case has made the insider trading probe more serious. Experts believe it could change future rules. Regulators now need to decide what counts as legal trading and what constitutes illegal trading.
Congress has asked both companies to share records soon. The results may lead to new laws. These laws could limit who can use prediction markets.
This investigation may change the future of prediction markets, and stricter rules could come soon. Platforms must prove they can stop insider trading risks and protect fair trading.
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