Event contracts traded on a DCM are subject to certain prohibited trading practices, which are policed both by the DCM and by the CFTC. The CFTC has made it clear that it will use its enforcement authority to police illegal trading practices occurring on DCMs that offer event contracts. On February 25, 2026, the CFTC Division of Enforcement (“DOE”) issued the DOE Advisory regarding two instances of insider trading and fraud that occurred on Kalshi. Although these cases were resolved by Kalshi’s internal enforcement team, DOE emphasized its willingness to investigate and prosecute trading violations while also noting that DCMs have an independent duty to monitor trading on their respective platforms. 37
In the DOE Advisory, the DOE reminded market participants that the CFTC has the authority to police illegal trading practices occurring on any DCM, including activity constituting:
Misappropriation of confidential information in breach of a pre-existing duty of trust and confidence to the source of the information (commonly known as “insider trading”); 38
Pre-arranged, noncompetitive trading and wash sales; 39
Disruptive trading; 40 and
Fraud and manipulation. 41
Consistent with this stance, the Request seeks comment on insider trading of event contracts, asking, among other things, whether:
37 CFTC Staff Advisory on Enforcement Authority over Event Contracts (Feb. 25, 2026), available at https://www.cftc.gov/media/13351/Enf_AdvisoryKalshi022526/download. 38 CEA section 6(c)(1) (“It shall be unlawful for any person, directly or indirectly, to use or employ, or attempt to use or employ, in connection with any swap, or a contract of sale of any commodity in interstate commerce, or for future delivery on or subject to the rules of any registered entity, any manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the Commission shall promulgate by not later than 1 year after July 21, 2010, provided no rule or regulation promulgated by the Commission shall require any person to disclose to another person nonpublic information that may be material to the market price, rate, or level of the commodity transaction, except as necessary to make any statement made to the other person in or in connection with the transaction not misleading in any material respect.”); CFTC Regulation 180.1(a)(1)(“It shall be unlawful for any person, directly or indirectly, in connection with any swap, or contract of sale of any commodity in interstate commerce, or contract for future delivery on or subject to the rules of any registered entity, to intentionally or recklessly: (1)Use or employ, or attempt to use or employ, any manipulative device, scheme, or artifice to defraud”).
39 CEA sections 4c(a)(1) and (2)(A); CFTC Regulation 1.38(a).
40 CEA section 4c(a)(5) (“It shall be unlawful for any person to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that— (A)violates bids or offers; (B)demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or (C)is, is of the character of, or is commonly known to the trade as, ‘spoofing’ (bidding or offering with the intent to cancel the bid or offer before execution).”) 41 CEA section 9(a)(2) (“...manipulate or attempt to manipulate the price of any commodity in interstate commerce, or for future delivery on or subject to the rules of any registered entity, or of any swap...”).
March 2026 / Page 13
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