Soldier’s arrest comes after pattern of suspicious trades on prediction markets

(CNN) — After US troops captured Venezuelan President Nicolás Maduro in January, the image of him handcuffed and blindfolded while wearing a Nike tracksuit wasn’t the only thing that went viral.

The Internet was soon buzzing over an anonymous trader on Polymarket, the prediction market, who netted hundreds of thousands of dollars from longshot bets that Maduro would soon be ousted.

That suspicious activity prompted a federal investigation that this week led to the first known example of US authorities charging someone with insider trading on prediction markets, the booming, multibillion-dollar industry that allows users to bet on nearly everything from war to politics to sports.

The arrest of the soldier, Gannon Ken Van Dyke, could signal harsher law enforcement scrutiny into the industry.

Federal prosecutors said Van Dyke, a US special forces master sergeant, used his knowledge of the classified raid to place bets on the operation that won him about $400,000 in profits. He hasn’t yet entered a plea in the case.

Those alleged bets fit into what is now a well-established pattern of suspicious trades coinciding with major geopolitical events, raising concerns about how people in various positions can wield their knowledge of sensitive information to manipulate markets and cash in.

Here are some of the most notable examples of suspicious activity on prediction sites that have recently attracted attention.

Iran war bets

US federal law prohibits prediction markets from offering bets on war or assassinations. However, the Maduro-related bets were placed on Polymarket’s offshore site, unfettered by these restrictions.

CNN reported last month that one Polymarket trader made nearly $1 million since 2024 by placing remarkably accurate and well-timed bets relating to when the US and Israel would launch military strikes against Iran, including before the current war began in February.

There were also newly created accounts that bet big on the US-Iran ceasefire shortly before Trump announced it earlier this month, according to the Associated Press.

Israeli authorities earlier this year arrested two people, including a military reservist, who they said placed Iran-related bets using classified information.

‘Political insider trading’

Kalshi, another large prediction market, announced this week it suspended three congressional candidates from its US-approved platform for “political insider trading,” by betting on their own races.

But the company said it wasn’t referring these cases to the Department of Justice for possible criminal prosecution, and legal experts told CNN that it’s probably not illegal to bet on your own campaign.

Earlier this year, Kalshi took action against a little-known candidate for California governor who similarly bet on his own race.

CNN has a partnership with Kalshi and uses its data to cover major events. Editorial employees are prohibited from participating in prediction markets.

Bets involving celebrities

Issues with potential insider trading also extend to the world of celebrities.

The Wall Street Journal reported that a bettor placed well-timed wagers related to Taylor Swift’s engagement announcement last year.

In February, Kalshi suspended and fined an employee of YouTube star MrBeast for trading on markets related to the live streamer. The company said the employee made about $5,400 in profit through “improper trading activity” on their platform.

An emerging industry

These markets have become more prevalent in American life over the past year, with platforms advertising heavily on both TV and the internet and inking deals with several major media companies who use their data to cover major news events.

Proponents of prediction markets say they enable the free flow of information and provide more precise public-opinion data than traditional polling.

Opponents say the markets are used to commoditize matters of life and death, and war and peace. They also argue that easy accessibility has exacerbated a growing public health threat of gambling addiction, especially among young men.

Critics have argued that President Donald Trump’s administration is being overly supportive toward prediction markets, and Democrats and Republicans on Capitol Hill have proposed legislation to reign in the industry.

The president’s son, Donald Trump Jr., is an adviser to both Kalshi and Polymarket, and is an investor in Polymarket. (Trump Jr. has said via a spokesperson that he does not trade on prediction markets and does not interact with the federal government on their behalf.)

Reacting on Thursday to Van Dyke’s arrest, the president said he generally is not a fan of prediction markets but then swatted away concerns about insider trading.

“The whole world, unfortunately, has become somewhat of a casino … I don’t like it conceptually, but it is what it is now,” Trump said.

The-CNN-Wire
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