Kalshi, a leading prediction market company, said it has arrested and penalized two users for insider trading activities on its platform, including an editor of popular social media star MrBeast.
The company said it had more than a dozen active insider trading cases among the 200 it investigated. On Wednesday, Kalshi revealed details of two resolved cases, including against Artem Kaptur, who was identified as working for James Donaldson, known for his MrBeast persona linked to his massive social media presence as well as the reality TV show “Beast Games.”
Kaptur allegedly made $4,000 deals regarding what would happen on the show MrBeast, for which he worked as a visual effects editor. Kalshi suspended him for two years and fined him more than $20,000.
“Beast Industries has no tolerance for this behavior, whether from applicants or our own employees,” the company that employed Kaptur said in a statement. “We have long had a policy in place prohibiting employees from using proprietary company information, which protects the highest standards and ethics within our organization.”
Beast Industries said it has “already launched an independent investigation” into the matter, while encouraging Kalshi to “be more open” about communicating its findings in the future.
Insider trading is prohibited at Kalshi, a regulated exchange licensed as a “designated contracts marketplace” with the U.S. Commodity Futures Trading Commission, and the company outlined its actions against Kaptur and another user who took advantage of their unique knowledge in violation of the CFTC’s usage policy.
In the other case, user Kyle Langford allegedly bet $200 on his own candidacy for governor of California and posted about it on social media, earning him a 5-year ban and a penalty equal to 10 times the amount of the trade.
Langford, currently running for Congress, did not immediately respond to a request for comment. The CFTC also did not immediately respond to questions about its role in these cases.
Kalshi’s two cases once again highlight one of the concerns of the US derivatives regulator, the CFTC. While this agency is currently working on rules to govern prediction markets, its previous chairman, during the administration of former President Joe Biden, had often lamented that the CFTC was not able to control the entire world. Markets that span tiny bets on topics both broad and obscure and in jurisdictions around the world can pose a potential challenge for — at last count — about 114 U.S. law enforcement employees.
In a recent interview on CNBC, Kalshi CEO Tarek Mansour struggled to define what constitutes insider trading when asked about a hypothetical example of people in the stadium before the Super Bowl knowing what artist Bad Bunny would do as his opening song — a question that resulted in deals with Kalshi.
Mansour likened this to controls on stock exchange companies, saying: “we do the same thing in Kalshi. We have the same enforcement mechanism.” However, he said Kalshi users must recognize the risks of betting on information subject to uncertain constraints. “We want to work with policymakers and regulators to make this happen,” he said.
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