On May 27, 2026, the U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) filed parallel criminal and civil insider trading actions in the U.S. District Court for the Southern District of New York against Michele Spagnuolo, a Google software engineer based in Switzerland. The complaints allege that Spagnuolo used confidential “Year in Search” data to place highly profitable bets on a prediction market platform—profiting with approximately $1.2 million—and then laundered the proceeds through cryptocurrency privacy services. The cases mark the second coordinated DOJ/CFTC enforcement action targeting insider trading on prediction markets in roughly a month, following the agencies’ April 2026 charges against a U.S. Army Special Forces master sergeant. [See our full alert on the May 27 case and our prior alert on earlier insider trading.]
The CFTC and DOJ have more recently opened an investigation into prediction market trades by former Congressman George Santos after Kalshi referred the case. According to news reports, Santos had posted on social media about his intention to attend the February State of the Union, which sent bets on his attendance skyrocketing. The former Representative then placed bets that he would not attend the event, making a profit of thousands when he viewed the speech from an airport.
On May 29, 2026, the Commodity Futures Trading Commission took a coordinated series of actions establishing a regulatory pathway for perpetual contracts and 24/7 trading within the Commodity Exchange Act. The Commission approved Kalshi’s BTCPERP perpetual futures contract for listing and issued a Policy Statement concerning the listing of perpetual contracts. The Market Participants Division issued a combined interpretive and no-action letter addressing the categorization of perpetual contracts as “foreign futures” and the re-use of digital asset margin collateral at a foreign broker. Finally, three staff Divisions jointly released a Staff Advisory and no action position setting forth expectations for registered entities seeking to extend trading and clearing operations to a 24/7 basis. In the wake of these actions approving digital asset based perpetual contracts, CFTC-registered exchanges, including Bitnomial, have requested approval for similar products.
In a May 27 order, the SEC approved Paxos as the first clearing agency registered for blockchain-based settlement. Paxos applied for the registration in July 2025, but its CEO stated that the firm has been in talks with the SEC for seven years. After the application was published in the Federal Register, the SEC received two comment letters in support of the registration and the innovation it represents. The registration allows Paxos to act as a clearing agency under Section 17A of the Securities Exchange Act.
On May 28, the CFTC filed the latest challenge to state regulation of CFTC-registered prediction markets under state gambling laws. After Rhode Island threatened enforcement on two prediction markets, the platforms filed lawsuits to prevent further action. Soon after, Rhode Island filed a separate complaint in state court requesting civil penalties. The CFTC is again pointing to its exclusive jurisdiction over designated contract markets under the Commodity Exchange Act to justify the action.
On June 2, 2026, the New York State Department of Financial Services (NYDFS) and the European Banking Authority (EBA) entered into a Memorandum of Understanding (MOU) on cooperation, exchange of information, and coordination regarding the supervision of stablecoin activities. Through information exchange, the EBA and NYDFS commit to cooperating on the supervision of stablecoin activities that may affect the stablecoin market in either jurisdiction. Notably, the MOU provides a framework for cross-border participation in on-site inspections and general investigations at the business premises of supervised entities located in the other party’s jurisdiction. While the MOU doesn’t add additional stablecoin regulation, NYDFS may share information with the FDIC, OCC, and FRB, which may increase stablecoin-related actions in the U.S.
If you have any questions about these developments or would like to discuss how they may affect your business, please contact any of the partners listed.