Commodity Exchange Act

And because these are federally regulated markets, at least Kelshi is, it's illegal.

It's against the Commodities Exchange Act.

But insider trading requires having non-public material information about a company and violating contracts that you have with them or an agreement you have with them.

So a dancer, it could be fairly clear-cut insider trading if they bet on a special guest, but it's less clear what if they have a cousin and the cousin told five friends.

It's that the rules and regulations were written a hundred years ago.

Like, actually, the Securities Exchange Act of 1934 is still the thing that we are interpreting today.

You rallied a coalition of, I believe, around 35 industry voices for a letter to the SEC about DeFi front ends.

You can't

That's illegal.

The Clarity

Act, which just a few weeks ago came up for a vote in Senate and did not move forward.

It's almost like this patchwork

so the case was charged in april and quite recently on october 26th the district court in manhattan issued a decision denying the defendant's motion to dismiss the indictment the defendant is a gentleman by the name of gannon van dyke who is a special forces soldier who as you said has been charged with insider trading relating to event contracts that he bought on polymarket allegedly relating to the operation to capture President Maduro in Venezuela.

and so he's charged under a couple different statutes and a couple different theories and at the high level he's facing potentially years in prison for his conduct under two theories one that he insider traded under the commodity exchange act and it's implementing regulations and so that relates to his use of confidential, classified information to buy these very lucrative contracts, what proved to be very lucrative contracts for him.

And the government's also charged him with wire fraud, a more traditional charge that's often employed in insider trading cases.

What are the key security issues here that might raise concern for agencies and contractors beyond the military?

Then the Grain Futures Act was enacted in 1922 and the Supreme Court upheld it as constitutional.

In 1936, the Commodity Exchange Act amended the Grain Futures Act and it expanded the idea of grain to the broader label of commodities and then made other additions and adjustments to that earlier law.

The list of regulated commodities under this act

grew over time.

The Commodity Exchange Act and the Grain Futures Act that it amended prohibited contracts that were meant to cheat or defraud or attempt to cheat or defraud another person.

It was illegal to deceive people in relation to these contracts, and it was illegal to make false reports to a party who was entering into a contract.

The Secretary of Agriculture was empowered to serve complaints to anyone who manipulated or attempted to manipulate the market price of a commodity or tried to corner a commodity.

That person could then be ordered to attend a hearing to determine whether they would be stripped of their commodity trading privilege or perhaps face other penalties.

The courts have dealt with this issue in multiple states.

The Commodity Exchange Act created a federal regulatory scheme for these contracts.

So we now have two parallel schemes.

We have state gambling regimes and federal derivatives regulation.

Trade is the biggest gambling house in the US, exactly.

So the notion that sports prediction markets are not like this idea that like derivatives or financial markets have never been considered to be gambling or there's some clear line in our heads is not true, right? Like all these markets have been considered gambling at certain point, right? So how do you differentiate? How do you like, what is the structural thing? The interesting thing about the Commodities Exchange Act, so our law, like the thing that the statute under which the CFTC operates and commodities futures operate, When you look at it, the history, it was enacted for the very purpose of preempting state gaming laws and state insurance laws.

So when states come say this cannot possibly be because the CAA cannot possibly be preempting state gaming laws, it's a bit historical because the very purpose of the statute was to preempt state gaming laws.

Why? Because pretty much most of the things that were traded on financial exchanges and are still traded on financial exchanges have at some point been considered and viewed as gambling because of the act of speculation.