Documents obtained by WIRED reveal that the CFTC has launched three previously unreported investigations into suspicious trades on Polymarket involving Biden pardons, Iran conflicts, and Google data.
- The CFTC has initiated private investigations into insider trading regarding Biden pardons, Iran event contracts, and Google rankings.
- Parallel investigations by the Southern District of New York (SDNY) are targeting individuals linked to Google's 'Year in Search'.
- Polymarket has faced previous arrests, including a US Special Forces officer and a Google engineer, for exploiting classified or internal data.
The United States government has intensified its scrutiny of Polymarket, the world's leading prediction market, launching at least three previously undisclosed investigations. According to internal documents obtained by WIRED via a Freedom of Information Act (FOIA) request, the Commodity Futures Trading Commission (CFTC) is probing potential insider trading across several high-profile event contracts.
The first wave of investigations focused on trades related to pardons issued by former President Joseph Biden. In early May, CFTC Chairman Michael Selig authorized an enforcement order allowing the agency to subpoena documents and take testimony. This move followed reports of a trader who allegedly netted over $300,000 by correctly predicting pardons for prominent MAGA critics, including Liz Cheney and Adam Schiff, just before they were announced.
Shortly after, the CFTC turned its attention to "Iran event contracts." This investigation was triggered following a 60 Minutes report detailing a network of accounts that achieved a staggering 98 percent win rate, profiting $2.4 million on geopolitical events involving Iran. This pattern suggests that traders may have had access to non-public intelligence or diplomatic leaks.
Why This Matters
BozokMedia analysis shows that the CFTC's reliance on press reports to trigger investigations indicates a systemic gap in real-time regulatory monitoring of decentralized prediction markets. As these platforms move from the fringes to mainstream financial tools—highlighted by Polymarket's $21 billion valuation—the line between "smart guessing" and "illegal insider trading" is becoming a legal battlefield.
The third investigation is perhaps the most corporate-centric, focusing on Google-themed contracts. Documents reveal that the CFTC and the Southern District of New York (SDNY) are conducting parallel probes into individuals who may have manipulated trades based on Google's "2025 Year in Search Ranking." This follows the arrest of Michele Spagnuolo, a former Google engineer accused of making over $1.2 million through insider trades.
"If these investigations are being prompted solely by press reports, that’s a significant sign of weakness in this regulatory scheme."The legal battle is now centering on the definition of these trades. Defendants, including a US Special Forces officer arrested for trading on the capture of Nicolás Maduro, argue that Polymarket activities are a form of betting rather than commodities trading, and therefore should not fall under the jurisdiction of the CFTC.
Platform Key Regulatory Action Notable Case Polymarket CFTC Private Investigations Google Engineer / Special Forces Officer Kalshi Referrals to CFTC George Santos ($35k Fine) Did You Know?: Polymarket was recently valued at $21 billion following a fundraising round led by 1789 Capital, a venture firm associated with Donald Trump Jr.Frequently Asked Questions
Q: What is the CFTC's role in prediction markets?
A: The CFTC regulates commodities and derivatives; it investigates whether prediction markets are operating as illegal gambling or unregulated commodities exchanges.Q: Why is the Google investigation separate from the Spagnuolo case?
A: The CFTC is looking for "additional individuals" who may have leaked search ranking data, suggesting a wider ring of insider trading beyond one employee.
