Congress Launches Investigation Into Polymarket Over Classified‑Info Betting Scandal

by

Polymarket hit with congressional probe over classified-info betting claims

The U.S. House Committee is investigating Polymarket and Kalshi. They’re concerned about possible insider trading and bets made using confidential information.

Summary

  • James Comer launched a congressional probe into Polymarket and Kalshi over suspected insider trading and classified-information betting activity.
  • Lawmakers cited reports of suspicious Iran-related wagers and a federal case involving a U.S. Army sergeant accused of using classified information to make over $409,000 in prediction market profits.
  • The investigation comes as Polymarket faces mounting pressure from regulators and a recent suspected exploit tied to its UMA CTF Adapter contract on Polygon.

Committee Chair James Comer has formally requested information from the CEOs of Polymarket and Kalshi. In a statement, the committee said Comer sent letters to Shayne Coplan and Tarek Mansour asking for internal records and details about how users are complying with rules on their platforms.

The committee plans to review how companies monitor for unusual trading activity, confirm customer identities, and follow rules limiting access based on location, all to ensure they’re following U.S. laws.

According to the letters, Representative Comer believes that companies running prediction markets have data that could reveal if people are trading using confidential information. He’s also worried that some platforms operating outside the U.S. might be letting users avoid following American regulations.

Following a New York Times report detailing suspicious trading activity, Congress is now taking a closer look at Polymarket. The report identified over 80 users who appeared to make bets based on advance knowledge of secret U.S. and Israeli military actions related to Iran. Lawmakers are questioning whether current rules for prediction markets are strong enough to prevent illegal insider trading.

Prosecutors have brought charges in a case brought to light by lawmakers. The case involves U.S. Army Master Sergeant Gannon Ken Van Dyke, who is accused of using secret information from “Operation Absolute Resolve” – an operation related to Venezuelan President Nicolás Maduro – to make bets that earned him over $409,000.

Why are lawmakers focusing on prediction markets now?

The House is investigating prediction markets at a time when these platforms are under increased scrutiny from regulators around the world. Just recently, Minnesota became the first state in the U.S. to prohibit them, labeling them as a form of illegal gambling.

In South Korea, officials have also been looking into Polymarket, raising concerns about whether its content involves illegal gambling.

India’s government has blocked access to Polymarket. The Ministry of Electronics and Information Technology classified prediction markets like Polymarket as illegal online gambling under the new Online Gaming Act of 2025, and instructed internet service providers to block them.

Indian officials are concerned that platforms where people bet real money on uncertain events could expose young people to the dangers of gambling. Discussions within the government have also connected these crypto-based prediction markets to worries about how stablecoins move money and potential, unregulated financial activity happening outside of traditional banks.

Argentina, Colombia, and Romania have all blocked Polymarket because their governments determined it wasn’t operating legally as a gambling site.

How does the latest probe add pressure on Polymarket?

Just days after experts noticed unusual activity, Congress is now investigating a potential security breach. Blockchain researcher ZachXBT alerted users that over $520,000 had been drained from accounts connected to a specific contract on the Polygon blockchain, known as Polymarket’s UMA CTF Adapter.

After the hack, security experts at PeckShield noticed some of the stolen crypto was quickly being moved through a service called ChangeNOW. And Bubblemaps, a blockchain analytics firm, tracked that the attackers were draining around 5,000 POL tokens every half minute during the attack – it was happening incredibly fast. As an investor, seeing that kind of rapid outflow was definitely concerning.

According to Polymarket contributor Shantikiran Chanal, the recent incident seems to have been caused by a private key being hacked, specifically one used for internal processes. He clarified that the platform’s main systems and user funds were not affected.

Recent developments have raised new technical security issues, adding to existing discussions about fairness in the market, how prediction platforms make decisions, and the legal challenges facing cryptocurrency-based prediction markets.

Read More

2026-05-22 18:05