A U.S. Army soldier accused of profiting from classified information through prediction market trades is seeking to have a landmark Commodity Futures Trading Commission (CFTC) case dismissed, arguing that the regulator has exceeded its legal authority.
Attorneys for Master Sergeant Gannon Ken Van Dyke claim the event contracts at the centre of the case, which were linked to the potential capture of Venezuelan leader Nicolás Maduro, do not qualify as “swaps” under the Commodity Exchange Act. The defence argues that because the contracts involved political and geopolitical outcomes rather than traditional financial instruments, they fall outside the scope of the CFTC’s insider trading rules.
The regulator alleges Van Dyke used confidential information obtained through his military role to place trades on prediction platform Polymarket before a U.S. operation involving Maduro became public. According to authorities, the soldier allegedly turned around $34,000 in wagers into more than $400,000 in profits by trading contracts connected to the timing of the operation.
The case, filed earlier this year, is considered a major test for how existing commodities laws apply to prediction markets. It represents the CFTC’s first insider trading enforcement action involving event contracts and one of the first attempts by U.S. authorities to apply traditional market abuse rules to blockchain-based prediction platforms.
Van Dyke’s legal team argues that expanding the definition of swaps to include such contracts would give the CFTC broad control over areas Congress never intended it to regulate. The motion also questions whether event-based markets should be treated similarly to financial derivatives when they involve outcomes such as elections, conflicts or government actions.
The dispute comes amid increased scrutiny of prediction markets, including Polymarket and Kalshi, as regulators examine how platforms should prevent users with access to private information from gaining an unfair advantage. The outcome of Van Dyke’s challenge could influence future enforcement efforts and help determine the regulatory boundaries for the rapidly growing event trading industry.