Executive Summary
- What’s new: SDNY and the CFTC announced parallel criminal and civil enforcement actions against a U.S. Army soldier for insider trading on an offshore prediction market.
- Why it matters: The actions are the first by the DOJ and CFTC applying the Commodity Exchange Act “insider trading” provisions to trading on prediction markets, and charging violations of the “Eddie Murphy rule” that prohibits trading on confidential government information.
- What to do next: Market participants trading on prediction markets should review compliance policies regarding insider trading to consider whether revisions are needed to cover the trading of prediction market contracts, in addition to traditional financial products.
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On April 23, 2026, the U.S. Attorney’s Office for the Southern District of New York (SDNY) and the Commodity Futures Trading Commission (CFTC) announced parallel criminal and civil enforcement actions against Gannon Ken Van Dyke, a U.S. Army soldier, arising from an alleged scheme in which he used classified military information to place trades on Polymarket’s offshore prediction market.
The charges allege that Van Dyke was involved in the planning and execution of the U.S. military operation to capture then-Venezuelan President Nicolás Maduro and used classified information to trade in prediction markets that depended on the outcome of the operation. According to the indictment and complaint, Van Dyke used a virtual private network (VPN) to access Polymarket’s offshore platform and purchased approximately $33,934 in event contracts across multiple Maduro-related markets, including the “Maduro out by January 31, 2026” contract. When the U.S. military captured Maduro on January 3, 2026, Van Dyke allegedly profited over $400,000.
The actions mark the first time the Department of Justice (DOJ) and CFTC have alleged “insider trading” on prediction markets, and the first time either agency has charged insider trading under the Commodity Exchange Act (CEA) provisions commonly referred to as the “Eddie Murphy rule,” which prohibit trading using misappropriated nonpublic government information in the commodities markets. Specifically:
- Section 4c(a)(3) prohibits federal government employees from using information obtained through their employment to effect transactions in futures, options or swaps.
- Section 4c(a)(4)(C) makes it unlawful for any person to steal, convert or misappropriate material, nonpublic information held or created by the federal government, and use that information to enter into a swap.
Here, the actions allege that Van Dyke, by virtue of his employment in the U.S. Army, gained access to nonpublic government information and used that information to enter into the event contracts in breach of the duties of trust and confidentiality he owed to the Army.
The actions also charge violations of antifraud provisions that apply to misappropriation of information more broadly, not just government information. Specifically, the actions charge Van Dyke with fraud under Section 6(c)(1) of the CEA and CFTC Regulation 180.1, which prohibit individuals from trading on the basis of material nonpublic information in breach of a duty owed to the source of that information. The criminal indictment also charges Van Dyke with wire fraud, as well as money laundering based on the movement of the proceeds of the trading.
The actions against Van Dyke are indicative of the attention regulators are paying to insider trading on prediction markets. As discussed in our alert of April 2, 2026, CFTC Director of Enforcement David Miller announced that enforcing insider trading laws with regard to prediction markets would be a priority. And in remarks in February, SDNY U.S. Attorney Jay Clayton indicated that he expected his office would be bringing cases based on insider trading on prediction markets.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.