Kalshi CEO clashes with disgraced former Congressman George Santos in latest prediction market controversy
Santos was ordered to pay $35,000 after the CFTC found he had manipulated Kalshi contracts tied to his State of the Union attendance.
Disgraced former Congressman George Santos, who was convicted of fraud, has been at it again, this time by making illegal bets on Kalshi, a prediction market platform. Hours after the Commodity Futures Trading Commission (CFTC) ordered Santos to pay $35,000 for manipulative trading, he took to social media to threaten the shutdown of Kalshi. He accused the platform of hiding behind a "protection veil" of contract swaps to evade gambling regulation.
In response, Kalshi CEO Tarek Mansour fired back on X, urging the platform to be judged by its enemies. He listed casinos, insider traders, and Santos himself as examples. The dispute erupted after it was discovered that Santos, who received a pardon from President Trump last year, had placed a bet on a Kalshi contract predicting his attendance at the State of the Union.
Like other prediction markets, Kalshi allows users to trade binary contracts on whether specific events will occur, paying out if the guess is correct. However, the platform prohibits participants from profiting from insider information, as was the case with Santos' bet on his own attendance.
Kalshi had flagged Santos' trading in the State of the Union market and referred it to federal regulators. This action violated Kalshi's rule against trading on contracts participants have the power to influence. The CFTC and Justice Department subsequently investigated Santos. They found that he used misleading social media posts and omissions to manipulate the market price of his positions, leading to illegal profits of over $17,500.
Santos first bet that he would attend the address in early February, then later reversed course and bet against it when bad weather threatened his travel plans. His strategic moves ultimately resulted in over 23,000 contracts betting he wouldn't attend. The CFTC held that Santos' actions were influenced by his false statements, such as posting a video claiming he would be in the House gallery and replying "I am" to a user asking if he planned to attend.
Written by urgent.news from Fortune's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.