Kalshi CEO denies insider trading! Criticizes offshore platforms for being unregulated as a problem

Kalshi CEO Mansour supports the House Representative Torres’ bill to ban federal officials from betting on prediction markets. Publicly distancing from “offshore unregulated” platforms, implying insider trading within Polymarket. A Polymarket account bet on Maduro’s ousting and profited $400,000. In December, Kalshi’s trading volume reached 6.26 billion USD, leading Polymarket’s 2.28 billion USD.

Maduro Arrest Sparks Insider Trading Allegations

Earlier this month, an account on the decentralized prediction market platform Polymarket bet that Venezuelan President Nicolás Maduro would step down before the end of January. Reportedly, after Maduro’s arrest, the account made a profit of $400,000. This has raised concerns about potential misuse of internal government information. The oddity of this case lies in the timing precision: the account began building positions weeks before the U.S. military raid on Venezuela and closed out immediately on the day of Maduro’s arrest for a profit.

Such accuracy is extremely rare in prediction markets. Geopolitical events are usually highly uncertain, even for professional analysts to predict specific timings. The account’s ability to pre-position before the event and exit perfectly on the day suggests it is unlikely to be luck or public intelligence analysis. The most plausible explanation is that the trader had insider information, possibly from the U.S. military, intelligence agencies, or the White House.

This insider trading not only undermines the fairness of Polymarket but could also constitute a breach of confidentiality. If U.S. government officials or contractors leaked military plans to prediction market traders, it would be a serious federal crime. The $400,000 profit might be just the tip of the iceberg; if the trader shared information with others or bet across multiple accounts, actual gains could be several times higher.

House Representative Ritchie Torres’ proposed “2026 Financial Prediction Market Public Integrity Act” is a response to this scandal. The bill would prohibit federal elected officials, political appointees, and executive branch employees from betting on prediction markets involving “government policies, actions, or political outcomes.” This ban is similar to insider trading regulations in the stock market, preventing officials from using non-public information obtained through their positions.

Three Characteristics of Insider Trading in Prediction Markets

Timing Precision: Pre-positioning weeks before the event, exiting perfectly on the event day

Unidirectional Bets: Betting only on a single outcome with large amounts, no hedging or diversification

Perfect Track Record: All historical bets hit, with a success rate far exceeding reasonable statistical expectations

Kalshi and Polymarket: A Regulatory Divide

Mansour attempted to distance Kalshi from other prediction market platforms facing insider trading allegations in a LinkedIn post, but he did not mention any names. However, industry insiders clearly understand he is referring to Polymarket. Mansour wrote: “This is obvious, but recent reports have conflated regulated prediction markets with unregulated offshore prediction markets. What non-U.S., unregulated platforms do has no relation to what regulated U.S. platforms do.”

Mansour stated that Kalshi, as a federally regulated platform, adopts insider trading regulations similar to those of the NYSE and NASDAQ, prohibiting users with non-public market information from trading. “However, it must be emphasized that this U.S. law applies only to regulated U.S. companies and does not apply to unregulated non-U.S. companies, and this is where the problem lies,” Mansour added.

This public distancing indicates that competition between Kalshi and Polymarket has intensified. As a platform operating under U.S. CFTC regulation, Kalshi must comply with strict KYC, AML, and insider trading rules. Polymarket, as a decentralized platform registered overseas, is not directly regulated by the U.S. authorities. This regulatory difference gives Kalshi an advantage in compliance but also limits its product flexibility.

However, data shows Kalshi is winning this competition. According to The Block, both Kalshi and Polymarket set record monthly trading volumes in December, with Kalshi reaching $6.26 billion and Polymarket $2.28 billion. Since March 2025, Kalshi has been the world’s largest prediction trading platform, maintaining a leading trading volume over Polymarket.

This leadership demonstrates that even under regulatory restrictions, compliant prediction markets can attract more capital. Institutional investors and traditional finance players prefer trading on regulated platforms due to lower legal risks. Kalshi’s support for insider trading bans effectively consolidates its compliance advantage while applying pressure on decentralized platforms like Polymarket.

Future Regulation and Industry Reshuffle in Prediction Markets

Major players in crypto and sports betting, including Crypto.com and DraftKings, have entered the prediction market space. The entry of these traditional companies will further mainstream and regulate prediction markets. These firms have established compliance teams and regulatory relationships, which will raise industry standards.

In the long term, insider trading bans may become a dividing line for prediction markets. Regulated platforms like Kalshi will attract more institutional capital and policy support, while decentralized platforms like Polymarket may face stricter regulation or be forced to exit the U.S. market. This divergence will reshape the competitive landscape of prediction markets.

For users, choosing regulated platforms may involve more restrictions (such as KYC requirements and betting limits), but also offers higher security and legal protections. Trading on decentralized platforms is freer but carries risks like platform exit scams, frozen funds, or regulatory crackdowns.

Overall, Kalshi’s support for insider trading bans is a strategic move. It not only strengthens its compliance edge but also sets higher integrity standards for the entire prediction market industry. The $400,000 Maduro case is just the tip of the iceberg; without timely legislation, prediction markets could become hotbeds of insider trading.