George Santos has settled CFTC case over Kalshi prediction market trades by accepting penalties and a three-year trading ban after regulators found he made misleading public statements while betting on his attendance at President Donald Trump’s State of the Union address.
Summary
- George Santos has settled CFTC charges over Kalshi prediction market trades by paying more than $35,000 and accepting a three year trading ban.
- The CFTC found Santos made misleading public statements while placing bets on whether he would attend President Trump’s State of the Union address.
- Trading records show Santos first profited from Yes contracts before switching to No contracts after his travel plans changed.
- Kalshi froze Santos’ account, referred the case to regulators, and said it detected the suspicious trading activity through its surveillance systems.
According to a July 31 order from the U.S. Commodity Futures Trading Commission (CFTC), former U.S. Representative George Santos must return $17,569.98 in trading gains, pay a $17,500 civil monetary penalty, comply with a cease-and-desist order, and stay away from trading on any CFTC-registered entity for three years after settling allegations tied to trades on prediction market platform Kalshi.
The settlement closes an investigation that began earlier this year after Kalshi referred Santos’ trading activity to regulators. While Santos accepted the settlement, the order states that he neither admitted nor denied the agency’s findings or legal conclusions.
CFTC says Santos traded both sides of Kalshi market
Regulators said Santos opened a Kalshi account on Feb. 11, roughly four months after President Donald Trump commuted his prison sentence. The former congressman funded the account with about $7,000 and traded only one event contract, which asked whether he would attend Trump’s State of the Union address.
Trading records included in the order show Santos initially accumulated 30,874 “Yes” contracts between Feb. 12 and Feb. 22 for $6,695.94.
Around the same period, Santos posted on X asking followers whether he should wear a serious or bedazzled suit to the address. The CFTC said the market price for the “Yes” outcome climbed from about $0.15 to $0.70 after the post. Santos later sold his entire position, making a profit of $3,448.43, before withdrawing $10,146.07 through a newly created Venmo account.
Later that day, his airline informed him that his flight to Washington had been canceled. Although he purchased a train ticket and continued posting publicly that he expected to attend, regulators said his trading activity soon moved in the opposite direction.
According to the order, Santos posted another video on Feb. 23 stating that he would attend the speech from the House gallery. About 40 minutes later, he started buying contracts that would pay out if he did not attend.
The CFTC said Santos eventually accumulated 23,855 “No” contracts worth $8,650.66. His train was canceled about an hour after he began building that position. Even after another X user asked whether he would still attend, Santos replied that he would, despite already knowing that both his flight and train had been canceled, information the agency said was not disclosed to the public.
Kalshi activity led to the CFTC investigation
On the day of the State of the Union address, internet records cited by the commission showed Santos accessing Kalshi from his residence rather than traveling to Washington. He later posted that watching the speech on an airport television had not been his original plan.
As the event unfolded, the “Yes” contract price dropped from $0.73 to $0.02, increasing the value of Santos’ “No” position. The order states that he exited those trades early on Feb. 25 with a reported profit of $14,390.57.
Based on that trading sequence, the CFTC concluded that Santos made misleading public statements and omitted material information that influenced the market price for his own financial benefit.
Instead of treating the conduct as a conventional insider trading case based on confidential information, the commission pursued the matter under the Commodity Exchange Act’s anti-manipulation provisions and CFTC Regulation 180.1. The order also classified the State of the Union attendance contract as a swap subject to the agency’s enforcement authority.
Earlier reporting by NPR in June said both the Department of Justice and the CFTC had opened investigations after Kalshi froze Santos’ account and referred the matter to regulators. However, the Washington Examiner later reported that a DOJ official denied the department had an active case, leaving the CFTC settlement as the only confirmed federal enforcement action tied to the trades.
Santos disputes allegations while accepting settlement
Responding through his attorney, Joseph W. Murray, Santos said he originally intended to attend the State of the Union address before severe winter weather disrupted his travel plans.
Murray denied that Santos intended to mislead traders or manipulate the prediction market. He also said his client chose to resolve the matter through settlement rather than continue with expensive litigation.
The CFTC order, however, concluded that Santos’ public statements and omissions occurred while he actively traded positions tied to the same event, allowing him to benefit from price movements in both directions.
Separately, Kalshi said it detected the unusual trading activity through its surveillance systems, froze Santos’ account, and supplied evidence to federal regulators.
Speaking to Axios last month, Kalshi Chief Executive Officer Tarek Mansour said the platform flagged the activity within seconds and received roughly 100 whistleblower complaints within minutes. He added that the exchange plans to pursue its own enforcement action for violations of exchange rules.
Kalshi also said it may reimburse affected traders if it successfully recovers funds from Santos. The company linked its monitoring process to integrity systems developed through its partnership with Sportradar.
Prediction markets continue facing regulatory scrutiny
The Santos case arrives as prediction markets continue drawing attention from regulators over insider trading and market manipulation concerns.
Earlier this year, Kalshi suspended three federal political candidates after determining they had traded on markets involving their own election contests. According to the company, candidates who can directly influence an event’s outcome violate exchange rules regardless of trade size.
Unlike those disciplinary actions, the Santos matter resulted in a referral to federal regulators and ultimately concluded with a formal CFTC enforcement order.
The agency’s approach also follows other recent prediction market cases. Federal prosecutors have charged U.S. Army Master Sgt. Gannon Ken Van Dyke with allegedly using advance knowledge of a military operation to generate more than $404,000 from Polymarket trades tied to Venezuelan President Nicolás Maduro.
In another case, prosecutors accused former Google software engineer Michele Spagnuolo of using confidential Google search ranking data to place multimillion-dollar bets on Polymarket before the information became public.
As regulatory attention has increased, Kalshi has introduced screening tools designed to identify participants directly connected to events listed on its platform, while Polymarket has expanded surveillance programs and hired blockchain analytics firm Chainalysis to assist investigations into insider trading and market manipulation.
