DOJ and CFTC Charge Soldier with Insider Trading on Prediction Market
Commentary by Steven Lofchie
The DOJ and the CFTC filed criminal and civil charges (see here and here,) against an active-duty U.S. Army Master Sergeant, alleging he used classified nonpublic military information to place bets on a prediction market and profit from the capture of former Venezuelan President Nicolás Maduro.
According to the charges filed in the United States District Court for the Southern District of NY, in December 2025, the soldier was involved in the planning and execution of a U.S. special forces mission to capture the Venezuelan President and had signed nondisclosure agreements prohibiting disclosure of classified or sensitive military information. The DOJ and CFTC allege that at the same time, the soldier created an account on the prediction market site Polymarket and placed approximately 13 bets - all taking the "Yes" position on contracts tied to the Venezuelan President's removal and related U.S. military action. On January 3, 2026, U.S. special forces apprehended the Venezuelan President, and the soldier's bets yielded more than $404,000 in profits.
The DOJ and CFTC further alleged that the soldier transferred his proceeds to a foreign cryptocurrency vault and into a newly created brokerage account. On January 6, 2026, he requested deletion of his Polymarket account - claiming loss of email access - and changed the email on his cryptocurrency exchange account to one not registered in his name.
In the indictment, the DOJ charged the Master Sergeant with:
- unlawful use of confidential government information for personal gain;
- theft of nonpublic government information;
- commodities fraud;
- wire fraud; and
- making an unlawful monetary transaction.
In the CFTC's parallel civil complaint, the agency alleged violations of the CEA and CFTC regulations, and sought restitution, disgorgement, civil monetary penalties, trading and registration bans, and a permanent injunction. Polymarket referred the suspicious trading to the DOJ and cooperated with the investigation.
Commentary
The diversity of events that may become contracts on prediction markets will make it very challenging to monitor insider trading. One important key, as likely was the case here, will be for each prediction market to identify big winners on unusual bets.
It may also be necessary to rethink what it means to have inside information. In the instant case, the solder clearly owed an obligation to the US government not to use the information in the soldier's possession. But there will doubtless be other situations where there is no obvious obligation to a third party to keep information confidential; and it it cannot be the case that an advantage in knowledge inherently means that one has inside information.
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