The Department of Justice is reportedly investigating former congressman George Santos for making insider trades on Kalshi.
According to NPR, Santos is accused of trading on a market about whether he would attend the 2026 State of the Union address. He initially posted on social media site X that he would attend, before later posting that he would not be present. Just before the post about being absent, there was a spike in trades on Santos not attending, large enough to dramatically move the price.
NPR reports that Santos himself placed bets that delivered “tens of thousands of dollars in profit” just before the second post.
It said Kalshi “detected Santos’ trades, froze his account and referred the case to the Commodity Futures Trading Commission and the Department of Justice, which both opened investigations into Santos.“
Are the trades illegal?
While Santos’ alleged actions would unambiguously be against Kalshi’s terms and conditions, it is not totally clear whether they are illegal. Under the CFTC’s more narrow insider trading laws, designed for farmers hedging risk, certain forms of trading on non-public info can be legal, if it does not involve material that was misappropriated or shared in violation of an existing agreement like a work contract. Santos’ non-attendance would appear to fall into that category.
However, if Santos’ first post claiming he would attend the State of the Union was determined to be market manipulation — for example, if he knew he would not attend and made the post to change the odds on his attendance — this would be criminal activity.
Unusual political career
The trades are the latest chapter in the unusual political career of George Santos. He was elected to Congress for New York’s Third District in 2022, but it was soon revealed that many of his claims about his background appeared to be fabricated.
In December 2023, less than a year after being sworn in, he was expelled from Congress. In 2024, he pled guilty to wire fraud and aggravated identity theft.
This is the most recent case of Kalshi taking action against a politician for insider trading. Three candidates were banned and fined in April for betting on their own elections. Kalshi agreed to settlements with Matt Klein and Ezekiel Enriquez and fined Mark Moran.
Meanwhile, federal authorities have charged two people with insider trading crimes within the last six weeks, both related to trades on Polymarket’s offshore blockchain-based site.
On April 23, the Department of Justice charged U.S. soldier Gannon Ken Van Dyke with making a number of insider trades on Polymarket’s global site on the removal of Venezuelan President Nicolas Maduro. On May 27, the U.S. Attorney’s Office for the Southern District of New York unsealed a criminal complaint against Google employee Michele Spagnuolo, who is accused of using confidential information about Google’s “year in search” results to make a profit of about $1.2 million.
