• DOJ arrested Gannon Ken Van Dyke for making $400K on Polymarket bets before Maduro’s January capture.
• This marks the 1st major insider trading case for Polymarket, with the DOJ pursuing up to 60 years.
• Polymarket updated its rules in March to curb insider trading, though the lack of KYC limits enforcement.

Prediction market platforms like Polymarket have become extremely popular, expanding access to betting markets that even people in the know can profit from.

On Thursday, the U.S. Department of Justice (DOJ) arrested Gannon Ken Van Dyke, a U.S. soldier who was directly involved in the capture operation of Venezuela’s Nicolas Maduro and his wife, Cilia Flores, back in January, for allegedly taking advantage of his knowledge to profit from using these prediction markets.

According to the department, the commando placed over $33,000 in Polymarket bets hours before the operation that removed Maduro from Venezuela was executed. The move netted over $400,000 in profits for Van Dyke, who withdrew his proceeds and tried to delete his account from the platform.

U.S. Attorney Jay Clayton for the Southern District of New York said that Van Dyke “allegedly violated the trust placed in him by the United States Government by using classified information about a sensitive military operation to place bets on the timing and outcome of that very operation, all to turn a profit.”

Van Dyke faces up to 60 years in prison, as he has been charged with three counts of violating the Commodity Exchange Act, one count of wire fraud, and another count of unlawful monetary transactions.

On social media, Polymarket acknowledged they had identified the user and referred the matter to the DOJ, cooperating with the investigation. “Insider trading has no place on Polymarket. Today’s arrest is proof the system works,” it claimed.

The case might become one of the first high-profile prosecutions for insider trading on prediction markets like Polymarket, which have made renewed efforts to curb these behaviors. Even so, due to its decentralized origin, the platform allows users to place bets without providing any know-your-customer (KYC) information.

In March, Polymarket updated its rules to explicitly profile trading by those who can influence the outcome as instances of insider trading. The platform has also faced opposition for allowing war bets to happen, including a prediction market that involved the detonation of a nuclear bomb before the year’s end, which was finally removed.

Bets regarding the rescue operation of an airman who went missing in Iran also faced rejection from Rep. Seth Moulton, a Massachusetts Democrat and Marine Corps veteran who qualified them as “disgusting,” claiming that Donald Trump was “an investor” in this market, and that he could have access to intelligence that was not public then.

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