CFTC Polymarket case paused over soldier’s $400K bets

A federal judge has paused the CFTC’s civil case against a US Army soldier accused of using classified information to earn more than $400,000 from Polymarket contracts tied to Nicolás Maduro’s removal.

CFTC case paused until criminal proceedings conclude

US District Judge Andrew Carter granted prosecutors’ request on Aug. 10 to stay the Commodity Futures Trading Commission’s civil case against Gannon Ken Van Dyke, an active-duty US Army Special Forces master sergeant.

The civil proceeding will remain paused while the Justice Department pursues its criminal case over substantially the same alleged conduct. Prosecutors asked for the stay in July, arguing that allowing both matters to advance could create complications because they involve overlapping evidence, witnesses, and legal questions.

Van Dyke opposed the request and sought to defend both cases at the same time. Carter nevertheless concluded that pausing the civil action pending the criminal case was appropriate.

A stay does not dismiss the CFTC’s claims or decide whether Van Dyke violated commodities law. It temporarily suspends the regulator’s lawsuit while the criminal case, which carries greater potential consequences for the defendant, moves forward.

The CFTC filed its complaint in April. It accused Van Dyke of fraudulently trading event contracts using material nonpublic information obtained through his military role.

The regulator seeks disgorgement, restitution, civil penalties, permanent trading restrictions, and an injunction against further violations of the Commodity Exchange Act.

Soldier allegedly made $409K from Maduro contracts

The Justice Department charged Van Dyke with unlawfully using confidential government information, theft of nonpublic information, commodities fraud, wire fraud, and conducting an unlawful monetary transaction.

Prosecutors allege that Van Dyke participated in planning and executing Operation Absolute Resolve, the US military operation that captured Maduro in January. His role allegedly gave him access to sensitive information about the operation before it became public.

Van Dyke allegedly created a Polymarket account on Dec. 26, 2025, and used a virtual private network with a foreign exit node to access the platform. Court filings say he spent approximately $33,934 on 13 trades between Dec. 27 and Jan. 2.

The positions included “Yes” contracts on whether Maduro would leave office by Jan. 31, whether US forces would enter Venezuela, and whether President Donald Trump would invoke war powers against the country.

According to prosecutors, Van Dyke bought more than 436,000 shares in the Maduro removal market before US forces captured the Venezuelan leader on Jan. 3. Several contracts subsequently resolved in his favor, leaving him with approximately $409,881 in profit.

Authorities also allege that Van Dyke moved the proceeds through a foreign crypto vault, an exchange and a newly opened brokerage account. He later asked Polymarket to delete his account after reports began circulating about suspicious trading on the Maduro contracts.

Van Dyke pleaded not guilty to the charges. crypto.news previously reported that his case represents the first US insider-trading prosecution involving a prediction market.

Defense challenges the CFTC’s event-contract theory

Van Dyke has filed a motion seeking dismissal of the criminal indictment on several grounds. One argument questions whether Polymarket’s binary event contracts can be treated as swaps under the Commodity Exchange Act.

His lawyers contend that the CFTC’s treatment of these contracts was legally ambiguous when the alleged transactions occurred. That challenge could force the court to examine whether existing derivatives laws clearly cover blockchain-based contracts that pay according to political or geopolitical outcomes.

The government relies partly on a provision known as the “Eddie Murphy Rule.” Congress adopted the measure to prohibit federal employees from using nonpublic government information for personal gain in commodity transactions.

The CFTC alleges that Van Dyke acquired information through his government position, owed a duty to keep it confidential and used it to trade swaps for profit. The defense disputes whether the contracts fall within the relevant statutory definition.

The dispute goes beyond Van Dyke’s alleged conduct. A ruling on the contracts’ legal classification could affect how the CFTC approaches future insider-trading cases involving Polymarket, Kalshi and other event-contract platforms.

“Prediction markets are not a haven for using misappropriated confidential or classified information for personal gain,” US Attorney Jay Clayton said when announcing the charges.

Polymarket faces wider insider-trading scrutiny

The case comes as prediction-market operators face growing pressure to identify users trading with confidential information.

Polymarket reportedly referred nearly 100 wallets to authorities after researchers identified suspicious activity across approximately $200 million in first-half 2026 trades. The platform has also said it cooperated with authorities in the Van Dyke investigation.

Congress has opened a separate inquiry into Polymarket and Kalshi, requesting information about surveillance systems, customer identification, and safeguards against trades based on classified material.

The CFTC has pursued similar misconduct on regulated platforms. Former US Representative George Santos recently agreed to return trading gains, pay a penalty, and accept a three-year ban following a CFTC case involving Kalshi contracts.

Van Dyke’s criminal trial could begin in late 2026 or early 2027, depending on the court’s consideration of his dismissal motion and other pretrial disputes. The CFTC’s civil case can resume after the criminal proceeding ends, leaving the regulator’s claims unresolved in the meantime.