US Soldier Was Blocked on Kalshi Before Taking Maduro Bets to Polymarket

In brief

• A U.S. soldier charged with using classified military intelligence to bet on the removal of Venezuelan President Nicolás Maduro failed to pass Kalshi’s KYC procedures.
• The government’s case will bring attention to differences between Kalshi and Polymarket’s businesses, according to Cole Schotz’ Michael Weinstein.
• Amanda Fischer, ex-chief of staff to former SEC Chair Gary Gensler, questioned why the CFTC and DOJ didn’t charge Polymarket for the lapse.

A U.S. soldier charged on Thursday with using classified military intelligence to bet on the removal of Venezuelan President Nicolás Maduro failed to open an account on Kalshi due to the platform’s know-your-customer (KYC) procedures, Decrypt has learned.

Although Gannon Ken Van Dyke was allegedly able to place 13 bets on Venezuela-related outcomes that generated more than $400,000 in profits on Polymarket, the 38-year-old failed to verify his identity with the firm’s chief rival, according to a person familiar with the matter.

In a complaint filed by the CFTC, the regulator alleged that Van Dyke submitted an application to open an account with a prediction market that’s not affiliated with Polymarket, which also facilitated wagers on events related to the removal of Maduro. The regulator also claimed that Van Dyke engaged the platform’s customer support before being turned away.

Following a 2022 settlement with the CFTC, Polymarket’s international platform officially prohibits U.S. persons from participating, using IP blocking to enforce compliance. The DOJ alleged in its complaint that Van Dyke, who was stationed at a military base in North Carolina, used a VPN to access Polymarket, while pretending to be a user in a foreign country.

As the DOJ and CFTC push forward with their respective cases, Polymarket’s inability to prevent U.S. persons from being able to use its international platform will likely be on display, according to Michael Weinstein, a white-collar criminal defense lawyer at Cole Schotz.

“The distinction between one company’s KYC and another company’s KYC will end up being material for the government in prosecuting this case,” he told Decrypt. “They’re likely going to subpoena his efforts to put through the trade with the one that was unsuccessful as well.”

Americans opening accounts on Polymarket’s U.S. platform are subject to KYC procedures; however, bettors using its international counterpart create accounts using only an email address or by connecting a crypto wallet. On Thursday, the company said in an X post that it identified Van Dyke’s conduct and referred the matter to, and cooperated with, authorities.

“Today’s arrest is proof the system works,” the platform added, pointing to enhanced market integrity rules to combat insider trading published last month.

When it comes to Polymarket’s business, the complaints raise more questions than answers, according to Amanda Fischer, policy director and COO at financial-reform group Better Markets, who served as chief of staff to former SEC Chair Gary Gensler.

“It’s curious that the CFTC and DOJ didn’t charge Polymarket for not appropriately prohibiting U.S. bettors from accessing the platform,” she told Decrypt. “It should raise questions about Polymarket’s move to launch a domestic platform here in the United States.”

In a statement on Thursday, CFTC Chair Mike Selig indicated that the regulator has no patience for fraud, manipulation, and insider trading. Earlier this month, he also told Politico that he’s not focused on activity related to prediction markets that’s happening offshore.

“It’s important that we not focus on regulating by enforcement and going on witch hunts offshore,” he said. “The most important thing for a market regulator and my policy aim is to set rules that work for Americans.”

Decrypt has reached out to Polymarket for comment. Kalshi declined to comment.

Daily Debrief Newsletter