SDNY and CFTC Charge U.S. Soldier with Using Classified Information to Profit on Prediction Market

On April 23, 2026, the U.S. Attorney’s Office for the Southern District of New York (SDNY) and the Commodity Futures Trading Commission (CFTC) and announced charges against a U.S. Soldier, Gannon Ken Van Dyke, for related to insider trading with classified nonpublic information regarding U.S. operations to capture former Venezuelan President Nicolás Maduro and his wife, Cilia Flores (Operation Absolute Resolve), including commodities fraud charges under the Commodities Exchange Act (CEA). The case significantly marks the first parallel charges with DOJ and CFTC related to insider trading activity on a prediction market and notably relies on a theory that the prediction markets contracts were commodities for the purposes of CEA violations.

Van Dyke’s Conduct

Van Dyke allegedly participated in the planning and execution of Operation Absolute Resolve and used his access to classified and material nonpublic information related to that operation to personally profit.  As alleged in the indictment, between December 27, 2025 and January 2, 2026, Van Dyke purchased approximately $33,934 worth of “YES” shares of markets predicting that Maduro would be removed from power by January 31, 2026, that U.S. Forces would be in Venezuela by January 31, 2026, that the U.S. would invade Venezuela by January 31 and that Trump would invoke War Powers against Venezuela by January 31.  Following Maduro’s ouster on January 3, 2026, Van Dyke profited more than $400,000. Van Dyke then allegedly took steps to cover his tracks by deleting his Polymarket account, falsely claiming that he had lost access to the email address the account was associated with, and changing the email registered to his cryptocurrency exchange account to an email not associated with his name.

As a result of this conduct, Van Dyke was charged with violating the CEA, wire fraud, making an unlawful monetary transaction, unlawful use of confidential government information for personal gain, and theft of nonpublic government information.

Takeaways

This case is proof that SDNY US Attorney Jay Clayton is putting muscle behind recent statement indicating that SDNY would look to bring fraud cases against individuals that fraudulently trade on prediction markets with material nonpublic information.  SDNY teaming up with CFTC to bring parallel action for the first time in this context also reflects SDNY’s view that they see a clearer path and less litigation risk with classifying the prediction market contracts (at least the ones at issue in this case) as commodities, rather than securities.  More criminal prosecutions and regulatory actions are sure to follow given increased media scrutiny regarding fraud on prediction markets, the playbook that SDNY and CFTC are laying out with this action, and proactive law enforcement referrals from prediction markets.  Indeed, shortly following the announcement of the charges by SDNY and CFTC, Polymarket confirmed that as a result of its enhanced market integrity rules, it identified another user trading on classified government information and reported this conduct to DOJ.  Kalshi has similarly been enforcing its market integrity rules and reporting suspected misconduct to federal regulators. 

As we have written about here, the regulation of prediction markets is complex and evolving.  With this action, DOJ and CFTC have made clear that they will not hesitate to enforce fraud on prediction markets and demonstrated the wide variety of statutes and charging theories they can use to combat this fraud.