Prediction markets face DOJ scrutiny over well-timed bets on Nicols Maduro capture, Iran strikes: sources

Federal prosecutors in Manhattan are scrutinizing well-timed bets on prediction markets that have lately grabbed headlines — and are examining whether they may have violated insider trading laws, sources told The Post.Officials at the US Attorney for the Southern District of New York — headed by former Securities and Exchange Commission Chairman Jay Clayton — recently met with reps from Polymarket about lucrative wagers on surprise events like the capture of Nicolás Maduro and missile strikes on Iran, sources close to the situation said.“The action in the prediction markets, like the action in any markets, is stuff that will be looked at,” a source with knowledge of the matter told The Post.The person added that both the SEC and the US Attorney’s office have authority to probe concerns about insider trading and market manipulation in “all markets … just because a market is new doesn’t mean it can’t be investigated.”Officials leading the Southern District’s securities and commodities fraud unit met with representatives of Polymarket to discuss potential violations of existing law in the rapidly expanding sector, the sources said.Polymarket, headed by CEO Shayne Coplan, didn’t respond to a request for comment. It couldn’t immediately be learned whether federal prosecutors have also met with rival prediction markets site Kalshi.But “all of them are being looked at,” said the source with firsthand knowledge of the matter.The person added that no specific trade has caught the US Attorney’s eye.

“There just a lot out there, too much to ignore,” the source said.A spokesperson for Kalshi, headed by CEO Tarek Mansour, referred The Post to social media comments by the company’s Head of Enforcement Robert DeNault saying insider trading and market manipulation are violations of Kalshi’s rules.“Kalshi has been and will continue to collaborate with law enforcement on investigations to ensure the integrity of regulated prediction mark...