Polymarket has announced tougher insider trading controls as controversy surrounding insider trading continues to grow.
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Key Takeaways
Polymarket says it is strengthening its systems for identifying insider trading and other suspicious activity ahead of the US midterm elections.
Nearly $12 million has been traded on whether the CLARITY Act will become law in 2026, although traders currently give it only a 15% chance.
Rival Kalshi has permanently banned former congressman George Santos over trades linked to his own State of the Union attendance.
Polymarket has pledged to intensify its crackdown on insider trading and other market misconduct as millions of dollars flow into politically sensitive prediction markets.
The company’s new investigations chief said it has surveillance systems capable of identifying abnormal trading ahead of the US midterm elections, when lawmakers expect activity on political contracts to surge.
The assurances arrive as traders wager nearly $12 million on whether the CLARITY Act will become law before the end of 2026.
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Polymarket Chief Says Platform Can Detect Suspicious Trades
Polymarket is preparing to disclose more information about the systems it uses to protect the integrity of its markets.
The company’s monitoring operation combines machine learning with blockchain analytics, open-source research and conventional trade surveillance, according to Reuters.
Bautista, a former FBI investigator who joined the company in June, said she was confident Polymarket would provide the resources required to police its platform.
She added that the company already had systems capable of detecting anomalous activity ahead of the midterms.
Polymarket’s international platform does not publicly reveal the identities behind individual accounts.
However, its blockchain system creates a visible record of wallet transactions that investigators can examine.
That information can help the company detect unusual trading patterns or connections between apparently separate accounts.
Bautista told Reuters that Polymarket had referred more than 100 matters to law enforcement.
Among the examples she cited was an account allegedly used by a US soldier to place trades connected to the capture of Venezuelan leader Nicolás Maduro.
Polymarket has faced separate questions over Americans accessing its international service.
The resulting settlement required Polymarket to prevent US customers from using that platform.
It later regained access to the US market by purchasing a federally registered exchange, which operates as the separate Polymarket US business.
CLARITY Act Market Draws Nearly $12M Before Senate Vote
The new enforcement push comes as Polymarket hosts a heavily traded contract on the fate of the CLARITY Act.
Approximately $11.6 million had been traded on whether the bill would be enacted before the end of 2026 at the time of writing.
Despite that volume, the Polymarket contract assigned a probability of only around 15%.
The next procedural vote is expected on Sept. 15 and will require 60 senators to advance.
Polymarket traders are betting on the CLARITY ACT | Source: Polymarket
Prediction markets covering legislation can carry particular insider-trading risks because lawmakers and lobbyists may possess information that has not reached the public.
For example, private knowledge about vote counts or leadership plans could allow a trader to take a position before the wider market reacts.
The CLARITY Act’s low probability could amplify such gains.
Kalshi Permanently Bans George Santos
Kalshi has meanwhile taken its strongest enforcement action to date against former Republican congressman George Santos.
The platform announced on Aug. 31 that Santos had been permanently banned from the platform.
It came after an internal investigation into trades surrounding his attendance at President Donald Trump’s State of the Union address.
Santos was in a position to determine the outcome himself because the market depended on whether he chose to attend.
Kalshi concluded that he had placed substantial wagers before publishing misleading statements about his intentions.
He eventually missed the address and earned approximately $17,839 from the resulting trades, according to an Associated Press report.
The company imposed a $71,356 penalty alongside the lifetime exclusion.
Hey @Kalshi thanks for the lifetime ban from your gambling platform.
Let’s see how much longer you guys are around for. 💋
Santos agreed to pay approximately $35,000 and accepted a three-year prohibition on prediction-market trading without admitting or denying the regulator’s findings.
He responded on X after Kalshi announced the additional punishment.
“Let’s see how much longer you guys are around for,” Santos wrote on X.
Other political figures investigated by Kalshi have received temporary suspensions after cooperating with its compliance department.
The company said Santos’s lack of cooperation contributed to the severity of the ban.
The CFTC brought a separate case over the same activity in July.
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Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
