An editor for the YouTube streamer MrBeast and a former California governor candidate are the first two people revealed by prediction market Kalshi to face disciplinary actions for insider trading.
Kalshi said it had suspended and fined YouTuber Artem Kaptur and former political hopeful Kyle Langford.
The company said it had opened 200 investigations into potential violations of its trading rules over the past year – over a dozen of which have become “active cases”.
Prediction markets have surged in popularity in the US, with companies like Kalshi and Polymarket letting users bet on everything from sports to politics. But concerns about wagers placed on inside information have proliferated.
“No financial exchange is immune from bad actors. Not stock exchanges, not banks, not prediction markets,” Bobby DeNault, who leads Kalshi’s enforcement efforts, said in a post on Wednesday.
“We’re committed to deterring and finding the bad actors, manipulators, and those who willingly cheat.”
The company disclosed a more than $20,000 fine and a two-year suspension for Artem Kaptur, who allegedly placed bets based on “material, non-public information” he obtained by working as a video editor for the YouTube streamer MrBeast.
Kalshi said its surveillance systems had flagged Kaptur’s “near-perfect” and “statistically anomalous” trading wins. Kalshi users had also notified the company about the abnormal trading activity.
A spokesperson for Beast Industries, the entertainment company founded by MrBeast, said it had “no tolerance for this behaviour, whether by contestants or our own employees”.
The company has a policy against employees using proprietary information and has initiated an independent investigation into the incident, the spokesperson said.
“We welcome Kalshi – and hopefully others in the space – also taking this issue seriously, but it only works if they are willing to communicate their findings,” the spokesperson added.
In a separate case, Kyle Langford, who ran for California governor last year, had placed bets on his own candidacy, Kalshi said in a filing.
The company added that those trades, which Langford had promoted in a social media post, violated Kalshi’s rules that prohibit political candidates from betting on their own elections.
Kalshi said it had fined Langford more than $2,000 (£1,475) and suspended him from the platform for five years.
“As a candidate in a race, you can (and probably should) follow and use Kalshi’s market forecast, but you should not trade on it,” the company said in a post.
Langford did not immediately respond to a request for comment.
Kalshi said it had reported both cases to the US Commodity Futures Trading Commission.
The prediction market industry’s leading companies attracted hundreds of millions of dollars in wagers on the outcome of the 2024 US presidential election.
The industry faced scrutiny from regulators under the Biden administration. But it has received a warmer welcome during the presidency of Donald Trump. Donald Trump Jr, the president’s son, serves in advisory roles at Kalshi and Polymarket.
Insider trading is illegal in the stock market, but there are fewer regulations in prediction markets.
In another recent high-profile prediction market incident, a gambler made nearly half a million dollars on the capture of Venezuela’s president just before it was officially announced, raising questions about whether someone profited from inside knowledge of the US operation.
By BBC News
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