US regulator has renewed warnings over improper tradingin prediction markets after two enforcement cases exposed how individualsmisused privileged information while trading on KalshiEX. The Commodity Futures Trading Commission’s EnforcementDivision issued an official advisory reminding traders and designated contractmarkets (DCMs) that insider conduct and fraud remain subject to full federaloversight.Political Candidate Traded on Own CampaignOne of the highlighted cases involved a political candidatewho traded contracts tied to the outcome of his own election campaign. Thetrades reportedly surfaced last year through social media videos showing the candidateplacing bets on KalshiEX.According to the watchdog, Kalshi’s compliance team contacted the individual the sameday, and he admitted knowing the trading violated exchange rules. The platformimposed a $2,246.36 sanction, including disgorgement of profits and a five-yearsuspension from access.A second case also from last year involved an individual whotraded prediction contracts linked to a YouTube channel while employed as aneditor for that same channel. Investigators determined the trader likely usedadvance knowledge of upcoming videos for personal gain.Related: Coinbase Asks Courts to Bar States From Regulating Prediction MarketsKalshi imposed a $20,397.58 fine and suspended the traderfor two years, citing violations tied to the misuse of material nonpublicinformation. The regulator has described the activity as similar to insidertrading, falling under the same legal prohibitions on misappropriation ofconfidential data obtained through a position of trust.CFTC Reiterates Oversight PowersWhile Kalshi handled these cases internally, the CFTCunderlined that it retains full authority to prosecute illegal trading on anyregistered exchange. The advisory specifically referenced statutes coveringinsider trading, prearranged trades, wash sales, disruptive trading, andbroader fraud and manipulation offenses.The commission also reminded exchanges of their duty tomaintain robust surveillance and enforcement programs, as required by theCommodity Exchange Act’s core principles.Read more: Prediction Markets Boom Draws CZ-Owned Trust Wallet, Joining MetaMask and Polymarket IntegrationCFTC Chair Michael Selig recently escalated a jurisdictional clash over prediction markets, directing the agency to intervene in ongoingcourt disputes and asserting that the US derivatives regulator, rather thanstate authorities, oversees event contracts.I have some big news to announce… pic.twitter.com/3OBNTaOnIL— Mike Selig (@ChairmanSelig) February 17, 2026In a video posted on X, he said the CFTC has filed an amicusbrief to defend what he described as its “exclusive jurisdiction” overprediction markets, which he likened to derivatives markets.Selig warned that state entities challenging the CFTC’sauthority over event contracts “will see” the agency “in court,” describingtheir actions as an “onslaught of state-led litigation.” He said the wave ofenforcement activity has targeted platforms including Coinbase, Crypto.com,Kalshi and Polymarket.This article was written by Jared Kirui at www.financemagnates.com.