Rep. James Comer expands House investigation into prediction market insider trading
Rep. James Comer, chair of the House Oversight Committee, is expanding an investigation into insider trading on prediction markets and seeking information on what a trio of online platforms is doing to root it out.
The Kentucky Republican, in letters sent Tuesday and first shared with CNBC, requested documents and information from the CEOs of Hyperliquid Labs, Crypto.com and Aristotle Exchange Inc., which owns the platform PredictIt, that explain their identity verification procedures and how they identify and prevent insider trading on their platforms.
"As online prediction platforms grow and become more mainstream, some bad actors have exploited the platforms to make thousands of dollars by placing bets based on nonpublic information," Comer said in a statement. "The House Oversight Committee is investigating whether these platforms are fulfilling their legal obligations and doing enough to identify and prevent insider trading before it happens."
Prediction markets β which allow users to buy and sell binary event contracts on the outcome of future events, from sports games to elections and, in some cases, war and other global events β have drawn increased attention from lawmakers as they've surged in popularity.
Comer first opened an investigation into Kalshi and Polymarket, the two largest and most prominent prediction markets, in May, amid a series of highly publicized bets on world events. A committee spokesperson said that those investigations are ongoing and that the committee has received nearly 1,000 documents and five briefings from representatives of the two companies.
In April, a U.S. soldier was arrested for allegedly using inside information to place bets on Polymarket about the ouster of former Venezuelan leader NicolΓ‘s Maduro in January, netting roughly $400,000. And a May investigation by The New York Times found that more than 80 Polymarket users had made bets with suspicious characteristics, including trades placed hours before the U.S. and Israel struck Iran.
Former Rep. George Santos, a New York Republican who was expelled from the House by his peers in 2023, allegedly used Kalshi to bet on whether he would appear at this year's State of the Union address, in February, while also making a series of public statements in the lead-up indicating he would be in the crowd.
Kalshi permanently banned Santos in August and fined him $71,356 for his actions. Both Kalshi and Polymarket earlier this year announced they were strengthening their internal insider trading rules.
But trades that have drawn insider trading concerns have not been specific to the largest platforms.
Comer, in his letter to Hyperliquid CEO Jeff Yan, cited reports of "a substantial leveraged short position on the ... platform within minutes of a presidential announcement concerning a U.S. tariff policy in October 2025 that was not publicly known at the time the position was established."
"This transaction, precisely timed to a nonpublic government decision, executed on a platform with apparently no identity verification or mechanism to refer the responsible party to U.S. law enforcement, mirrors a pattern of insider trading the Committee is investigating across the prediction market sector," Comer wrote in the letter.
Spokespeople for Hyperliquid, Crypto.com and Aristotle Exchange did not immediately respond to requests for comment on Tuesday.
Comer and the committee requested documents and communications from each company explaining their know your customer, or KYC, policies, and internal procedures to detect, investigate and report suspicious trading activity.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
