CFTC Opened Three Unreported Insider Trading Probes Into Polymarket Trades, FOIA Records Show

Federal regulators at the Commodity Futures Trading Commission have initiated at least three previously undisclosed investigations into potential insider trading on prediction market platform Polymarket, according to internal voting records obtained through Freedom of Information Act requests and first reported by Wired. The enforcement inquiries focus on specific trading activity surrounding presidential pardons, international conflict in Iran, and corporate search rankings on the $21 billion venture-backed platform.

In early May, CFTC Chairman Michael Selig authorized an order permitting the agency's enforcement division to conduct a private probe into suspected insider trading involving Polymarket contracts related to pardons granted by former President Joseph Biden. The order granted investigators authority to issue subpoenas, compel document production, administer oaths, and take formal testimony. The regulatory action followed news coverage by NPR detailing a trader who netted over $300,000 betting on pre-emptive pardons for political figures, including former Representatives Liz Cheney and Adam Kinzinger, as well as Senator Adam Schiff.

At the end of May, Selig approved a second investigation directive examining event contracts tied to Iran. That regulatory order came two weeks after a 60 Minutes segment reported on a cluster of suspicious Polymarket accounts that amassed $2.4 million in profits on Iran-related trades while maintaining a 98 percent win rate. Joseph Konizeski, a former chief trial attorney in the CFTC's enforcement division, noted that if regulatory proceedings are driven primarily by investigative media reports rather than agency surveillance, it indicates structural vulnerabilities in commodities market oversight.

A third federal inquiry was sanctioned in July targeting event contracts linked to Alphabet subsidiary Google. In internal agency emails released in the document package, Paul Hayeck, acting director of the CFTC's enforcement department, noted that investigators were focusing on additional individuals suspected of insider trading connected to Google's 2025 Year in Search Ranking. Hayeck added that the U.S. Attorney's Office for the Southern District of New York was conducting a parallel investigation, separate from the government's ongoing case against former Google engineer Michele Spagnuolo.

Google declined to comment on the new probe, pointing to a June statement indicating Spagnuolo was no longer employed by the company, while the Southern District of New York and the CFTC did not respond to requests for comment. Polymarket Deputy Chief Legal Officer Olivia Chalos stated in an email that while the platform does not comment on individual inquiries, it routinely refers matters to law enforcement agencies and assists ongoing investigations to maintain market integrity.

The regulatory scrutiny comes as Polymarket expands its footprint in the United States. After federal regulators barred its primary platform domestically in 2022, the company launched a federally compliant U.S. version offering a more limited catalog of contracts in late 2025. Polymarket recently attained a $21 billion valuation following a fundraising round led by 1789 Capital, the venture firm co-founded by Donald Trump Jr. The CFTC is also reportedly investigating Polymarket as a corporate entity, alongside historical insider trading probes involving rival platform Kalshi. Kalshi has referred at least 32 cases to the CFTC and previously issued a lifetime ban and $71,000 fine to former U.S. Representative George Santos for market manipulation involving his attendance at Trump's 2026 State of the Union address, a matter that also drew a $35,000 CFTC civil fine.

Federal prosecutors and commodities regulators have made two arrests to date linked to Polymarket insider trading inquiries. In April, federal authorities arrested a U.S. special forces officer who allegedly generated more than $400,000 using classified intelligence to trade contracts regarding the capture of former Venezuelan leader Nicolás Maduro. In May, Spagnuolo was arrested while traveling to New York for allegedly making over $1.2 million on insider wagers. Both defendants face criminal fraud charges from the Department of Justice alongside civil CFTC charges, with both asserting in court that prediction market contracts represent gambling rather than commodities transactions under federal law.

It remains unconfirmed whether the Department of Justice has opened criminal parallel probes into the Iran or presidential pardon contracts, as the agency did not respond to requests for comment. However, a former CFTC staff member noted that parallel criminal proceedings by federal prosecutors are highly probable given the national scope and sensitivity of the trades.