DOJ and CFTC Charge Army Soldier for Prediction Markets Insider Trading

Last week, the United States Attorneys’ Office for the Southern District of New York (SDNY) brought what appears to be the first criminal prosecution related to prediction markets insider trading. SDNY indicted an active-duty U.S. Army Special Forces master sergeant who allegedly profited by more than $400,000 in connection with his alleged use of material nonpublic information (MNPI) regarding a U.S. military operation to capture Nicolás Maduro and his wife to trade event contracts tied to that outcome. The Commodity Futures Trading Commission (CFTC) filed a parallel civil action the same day.[1]

Key Takeaways

• Prediction market enforcement has arrived. These charges follow recent statements by U.S. Attorney Jay Clayton and CFTC Enforcement Director David Miller that insider trading in the prediction markets is a significant SDNY and CFTC enforcement priority.  
• The charges involve a misappropriation theory of insider trading, in which the defendant allegedly purchased event contracts on the basis of MNPI in breach of a duty of trust and confidence.
• Companies and other organizations need prediction markets compliance frameworks. As discussed in our recent client alert, companies and other organizations should implement policies and procedures that address prediction market insider trading and train employees on the risks of using MNPI to transact in event contracts. As the charges demonstrate, blockchain activity is visible to regulators and carries the risk of investigation or inquiry into a company or organization from which confidential business information is allegedly misappropriated. 

Factual Overview

On April 23, 2026, SDNY and the CFTC brought parallel criminal and civil actions against Gannon Ken Van Dyke, an active-duty U.S. Army Special Forces master sergeant, alleging that he unlawfully purchased and sold event contracts on the basis of MNPI in prediction markets. The indictment and complaint allege that, from at least December 2025, Van Dyke had access—through his role in the planning and execution of “Operation Absolute Resolve”—to classified, nonpublic information concerning a U.S. military operation to capture Nicolás Maduro and was subject to nondisclosure obligations prohibiting its use for personal gain. The indictment further alleges that, from at least December 8, 2025 through at least January 5, 2026, Van Dyke participated in the planning and execution of Operation Absolute Resolve and, in that capacity, had access to sensitive, nonpublic, classified information about the operation. Van Dyke created an account on a prediction market platform on December 26, 2025.

Between December 30, 2025 and January 2, 2026, before any public disclosure of Operation Absolute Resolve, Van Dyke allegedly funded a previously inactive cryptocurrency exchange account with approximately $35,000, transferred digital assets to prediction market-linked wallet addresses, and accumulated more than 436,000 “Yes” shares in a January 31, 2026 “Maduro out” contract at an average price of approximately $0.074, as well as positions in additional Venezuela-related contracts, including those tied to U.S. military involvement and presidential war powers. Following the public announcement of Maduro’s capture, on January 3, 2026, the primary contract rapidly increased in value. Van Dyke allegedly sold contracts relating to presidential war powers and a potential U.S. invasion, thereby realizing gains of more than $404,000. Van Dyke allegedly sought to conceal his activity by requesting deletion of his prediction market platform account and changing the email address in his account profile.  

SDNY Criminal Action

SDNY charged Van Dyke in an indictment with alleged unlawful use of confidential government information for personal gain (7 U.S.C. § 6c(a)(3)), theft or misappropriation of nonpublic government information (7 U.S.C. § 6c(a)(4)(C)), commodities fraud (7 U.S.C. §§ 9(1) and 13(a)(5) and 17 C.F.R.§ 180.1), wire fraud (18 U.S.C. § 1343), and engaging in monetary transactions in criminally derived property (18 U.S.C. § 1957). The indictment also seeks forfeiture of his gains.

CFTC Civil Action

The CFTC charged Van Dyke with alleged violations of Sections 6(c)(1), 4c(a)(3), and 4c(a)(4)(C) of the Commodity Exchange Act and CFTC Regulation 180.1, which prohibit fraudulent or deceptive conduct in connection with swaps and, specifically, the use or misappropriation of nonpublic government information for trading. The CFTC asserts jurisdiction on the basis that prediction market event contracts are “swaps” because their value allegedly depends on the occurrence or nonoccurrence of future events with potential economic consequences and are purchased or sold in interstate commerce.  

The CFTC seeks permanent injunctive relief, civil monetary penalties, disgorgement, restitution, and broad trading and registration prohibitions, including a permanent ban on trading commodity interests.

[1] See Indictment, United States v. Van Dyke, No. 1:26-cr-00156 (S.D.N.Y. Apr. 23, 2026); Complaint, Commodity Futures Trading Comm’n v. Van Dyke, No. 26-cv-3369 (S.D.N.Y. Apr. 23, 2026).