Kalshi Cracks Down on Insider Trading, Discloses First Enforcement Cases

Prediction market platform Kalshi has disclosed details of two insider trading cases it recently closed, marking the first time the CFTC-regulated exchange has publicly released enforcement actions.

The cases involve a California gubernatorial candidate who bet on his own race and a YouTube editor who traded on non-public information about a streamer's content.

In the first case, a candidate for Governor of California placed roughly $200 in trades on his own candidacy — then posted about it on social media. Kalshi's surveillance team flagged the activity, froze his account, and launched an investigation.

The punishment: a five-year ban and a financial penalty of 10 times the initial trade size. The candidate has since dropped out of the gubernatorial race and is now running for Congress, according to Kalshi.

The second case involved a trader – Artem Kaptur, who worked as an editor for streamer MrBeast – who placed approximately $4,000 in bets on YouTube streaming markets. Kalshi's systems flagged his "near-perfect trading success on markets with low odds" as statistically anomalous. The investigation revealed the trader was employed as an editor for the streamer and likely had access to material non-public information.

That trader received a two-year suspension and a penalty of five times the initial trade size.

A Signal of Maturing Markets

Kalshi said it has opened 200 investigations in the past year, with over a dozen becoming active cases. Both cases disclosed Wednesday have been reported to the CFTC, and the fines will be donated to a non-profit focused on derivatives market education.

The exchange also recently announced an independent Surveillance Audit Committee, which will publish quarterly reports on flagged trades, investigations, and cases referred to regulators.

"No system is perfect. No financial exchange is immune from bad actors," Kalshi wrote. "We're committed to deterring and finding the bad actors, manipulators, and those who willingly cheat."

The disclosures come as prediction markets gain mainstream attention following their prominence in the 2024 U.S. presidential election. Kalshi's willingness to publicly name enforcement actions mirrors practices at traditional derivatives exchanges like CME Group.