【AI前沿】The US is betting on AI to catch insider trading in prediction markets

Bad beatsThe US is betting on AI to catch insider trading in prediction marketsThe Commodity Futures Trading Commission wants us to know it’s taking this very seriously.Kate Knibbs, wired.com–May 16, 2026 7:00 am|64Credit:Yuki Shimazu / FlickrCredit:Yuki Shimazu / FlickrText settingsStory textSizeSmallStandardLargeWidthStandardWideLinksStandardOrange Subscribers onlyLearn moreMinimize to navFor most of the past year, it looked likeprediction marketshad kicked off a new golden age of fraud. OnPolymarket, traders raked in fortunes fromsuspiciously timed betson geopolitical events like the raid on Venezuela and the Iran War. It wasn’t clear whether the US government would bother pursuing some of the most flagrant bad actors, since Polymarket’s crypto-based platform was technically offshore and not regulated or licensed within the country.Now, however, the Commodity Futures Trading Commission, which oversees prediction markets, wants you to know that it’s watching very, very closely. The agency is searching for suspicious behavior from traders within the United States who have been sneaking onto offshore markets, including Polymarket’s crypto platform—which is blocked stateside—by using virtual private networks. “We’re going to find them, and we’re going to bring actions,” agency chairman Michael Selig told WIRED this week, speaking from the CFTC’s headquarters in Washington, DC.Selig says the agency, which is especially lean right now, is staffing up. Like so many other AI-pilled workplaces, the CFTC is also leaning into automation to handle the growing workload, including tools that analyze trading patterns and flag potential manipulation. “You’ve got so much data,” Selig says. “When we feed it into AI, we get really great information. It can help us understand things, like where we might want to investigate, or when we might need to send a subpoena to a trader.”In addition to proprietary surveillance systems developed in-house, the agency’s arsenal includes third-partyblockchain tracing toolslike Chainalysis for crypto platforms, and market abuse detection software including Nasdaq Smarts for centralized markets. (Beyond Nasdaq Smarts, the agency did not specify which AI tools it uses and declined to share more specific examples.)Prominent prediction market companies have recently started touting all the work they’re doing to catch sketchy bettors. US-based exchange Kalshi, Polymarket’s primary competitor, eagerly announced that it hassuspendedand penalized customersflagged for insider tradingand market manipulation.In April, after significant backlash over suspected insider trading, Polymarket announced its own partnership with Chainalysis. It was part of a broader push to crack down on market manipulation. While the company’s CEO, Shayne Coplan,had talkedin the past about why insider trading could be good for prediction markets, Polymarket changed its approach this spring, updating its market integrity rules and announcing a partnership with Palantir for its US-based sports markets (the Chainalysis deal focuses on the offshore platform). The company did not respond to WIRED’s request for comments for this story.According to Chainalysis spokesperson Maddie Kenney, the company analyzes the same data for both clients. “The value Chainalysis adds for our customers, including Polymarket and the CFTC, is organizing the data and enriching it with the attributions and insights we’ve accumulated over years in the space,” she says. Certainly sounds like a good deal for Chainalysis!The CFTC’s assurances that it is hunting insiders comes at a moment of intense scrutiny on prediction markets. In March, Connecticut senator Chris MurphytoldWIRED that he suspected White House staffers were engaged in insider trading on war-related contracts. At the beginning of April, seven members of Congressaskedthe CFTC to investigate overseas markets offering war-themed events contracts. In a letter, the lawmakers argued that the commission had the authority and responsibility to curb insider trading, especially on “morally obscene” trades on military action. Selig recentlytoldCongress that the company is pursuing “hundreds, if not thousands” of insider trading tips.Investigations are not limited to federally regulated exchanges. “We’re surveilling the markets on a global basis,” he tells WIRED.Selig says that the agency will exert extraterritorial jurisdiction—its legal ability to enforce its laws beyond traditional boundaries—when it finds suspicious activity on offshore platforms like Polymarket, though he says it’s a case-by-case approach. “We use it in extreme circumstances,” he says, with an eye towards whether charges have a strong chance of sticking in court. “In any extraterritorial litigation, there’s going to be challenges to our authority, and that could also impair our ability to bring cases in the future.” According to Selig, the 2010 Dodd-Frank Act allows the CFTC more leeway to pursue this kind of enforcement