Federal authorities have arrested a US soldier who allegedly used classified information to capture then-Venezuelan leader Nicolas Maduro through the prediction market platform PolyMarket.
Gannon Ken Van Dyke, a 38-year-old US Army soldier who was involved in the plan to capture Maduro, reportedly placed more than a dozen bets on Polymarket linked to the operation, The Justice Department said on Thursday. He was accused of illegally using confidential government information for personal gain, among other charges.
According to prosecutors, Van Dyke’s bets totaled $33,034 and, ultimately, paid out more than $400,000.
The case underscores growing concern in Washington about the threat of insider trading at prediction market platforms such as Polymarket and its main rival, Kalshi. Once exclusive financial exchanges, prediction markets have emerged from obscurity over the past year with an extensive menu of bets on everything from US elections, sports and even the weather.
But their rise – with many precisely timed bets placed around geopolitical events such as Maduro’s capture and the war in Iran – has created widespread concern among policymakers about the companies and their regulation. Maduro’s trading on Polymarket made headlines earlier this year, being among the first to draw Congress’ attention. Shortly thereafter, Jay Clayton, the U.S. Attorney for the Southern District of New York, said he expected to see cases brought on the issue of insider trading in prediction markets.
Clayton, the former chairman of the Securities and Exchange Commission, whose office brought the charges against Van Dyke, said in a statement, “Prediction markets are not a den for the misuse of confidential or classified information for personal gain.” “The defendant allegedly violated the trust placed in him by the United States Government by using classified information about a sensitive military operation to bet on the timing and outcome of that same operation, in order to make a profit. This is clear insider trading and illegal under federal law.”
Wall Street regulator also in Commodity Futures Trading Commission filed charges against Van Dyke, alleging that he engaged in insider trading using “classified non-public information”.
CFTC Chairman Michael Selig said in a statement that Van Dyke “was entrusted with confidential information about US operations and yet he took actions that endangered US national security and endangered the lives of US service members.”
Van Dyke’s trading took place through Polymarket’s unregulated international platform, which runs on cryptocurrency technology and is believed to be closed to US users. According to complainVan Dyke, a master sergeant stationed at Fort Bragg, North Carolina, used a virtual private network to trade on the platform. Virtual private networks, or VPNs, can allow users to hide their location online and have been used for years by many prediction market traders to avoid such disruptions.
Polymarket was forced to close its international exchange from Americans in 2022 after settling charges with the CFTC alleging that the company was operating illegally in the US. There has since been a push to open a second platform regulated by the CFTC – and thus open to US users – but the product remains in testing.
Still, the company has proven to be a prediction-market darling of financial and political giants.
Intercontinental Exchange, parent company of the New York Stock Exchange, said in March it had invested $600 million in the company – following an initial investment of $1 billion. And last year, 1789 Capital — the venture capital firm that counts Donald Trump Jr. as a partner — invested in the company at undisclosed terms.
Trump Jr. also signed on to Polymarket’s advisory board at that time.
In a post on xPolyMarket, which is led by CEO Shayne Coplan, said it had identified a user who traded on classified government information and referred the case to the Justice Department. The company also noted that it cooperated with the investigation, as did prosecutors.
“Insider trading has no place on Polymarket,” the company wrote. “Today’s arrests are proof that the system works.”
