Kalshi, one of the leading prediction market firms, said it caught and penalized two users for insider trading activity on its platform, including an editor of popular social media star MrBeast.
The company said it has more than a dozen active insider trading cases among the 200 it investigates. On Wednesday, Kalshi revealed details of two he settled, including against Artem Kaptur, who was identified as working for James Donaldson, known for his character MrBeast that is linked to his massive social media presence as well as the reality competition show, “Beast Games.”
Kaptur is said to have made $4,000 in transactions related to what would happen in the show MrBeast, for which he worked as a visual effects editor. Kalshi suspended him for two years and fined him more than $20,000.
“Beast Industries does not tolerate this behavior, whether from contestants or our own employees,” the company that employed Kaptur said in a statement. “We have a long-standing policy against employees using proprietary company information that safeguards the highest standards and ethics throughout our organization.”
Beast Industries said it has “already launched an independent investigation” into that matter, although it encouraged Kalshi to “be more open” in communicating his findings in the future.
Insider trading is prohibited on Kalshi, a regulated exchange licensed as a “designated contract market” with the US Commodity Futures Trading Commission, and the company outlined its actions against Kaptur and another user who took advantage (CFTC) of its unique knowledge in violation of the user policy.
In the other case, user Kyle Langford is said to have bet $200 on his own candidacy for governor of California and posted about it on social media, earning him a 5-year ban and a fine of 10 times the amount of the trade.
Langford, now a congressional candidate, did not immediately respond to a request for comment. The CFTC also did not immediately respond to questions about its role in these matters.
The pair of cases in Kalshi further underline one of the concerns of the US derivatives regulator, the CFTC. While that agency is now working on rules to govern prediction markets, its previous chairman, under former President Joe Biden’s administration, had often lamented that the CFTC is not able to police everyone. Markets that extend to minuscule bets on topics both broad and obscure and in jurisdictions around the world can pose a potential challenge to (at last count) some 114 law enforcement employees in the United States.
In a recent CNBC interview, Kalshi CEO Tarek Mansour struggled to draw a line on what constitutes insider trading when asked about a hypothetical example of people in the stadium before the Super Bowl having knowledge of what performer Bad Bunny would do as his opening song, an issue that attracted Kalshi contracts.
Mansour equated it with controls in stock market companies and said: “we do the same in Kalshi. We have the same enforcement mechanism.” However, he said Kalshi users should recognize the risks of betting on information under uncertain restrictions. “We want to work with policymakers and regulators to get it right,” he said.
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