Investigation Overview
Federal regulators are currently in settlement discussions with Gabriel Perez, President Trump’s teleprompter operator. Perez is accused of profiting from his privileged access to the president’s remarks on the prediction market site Kalshi, making nearly $100,000 according to sources familiar with the probe.
The Mechanism of Alleged Profits
Perez is suspected of utilizing his knowledge of planned speeches to place bets on ‘mention markets.’ These markets allow wagers on whether specific words or expressions will be used during public events. As a result, traders speculate on various elements, such as presidential expressions or ties, with the prediction markets gaining popularity recently.
Regulatory and Platform Response
“Our surveillance team promptly flagged and referred these trades to the CFTC after an exchange investigation,” explained Robert DeNault, Kalshi’s enforcement head.
Kalshi detected unusual betting patterns from Perez. The company found he is a federal employee and reported the activity to the Commodity Futures Trading Commission (CFTC). Kalshi immediately froze approximately $90,000 of Perez’s profits and banned him from the platform.
Implications and Legalities
Using non-public information on prediction markets is illegal under platform rules and can lead to charges such as wire fraud and commodities fraud. As of now, it is uncertain if the Department of Justice is involved in Perez’s case.
Government Action and Precedents
White House staff received a memo cautioning against using non-public government information to place bets on Kalshi or similar platforms, labeling such acts as criminal offenses. Violations of prediction market rules highlight the serious nature of insider trading.
Examples of Insider Trading
In recent months, several cases of insider trading emerged. A U.S. Army soldier faced charges for accumulating $400,000 through Polymarket, based on advance information related to Venezuelan leader Nicolás Maduro. Another incident involved a Google engineer using insider knowledge for $1.2 million in profits on Polymarket.
Former Republican congressman George Santos was also under investigation for manipulating a Kalshi market by falsely claiming attendance at a Trump event, then profiting from a ‘no’ trade when he didn’t show.