Kalshi, one of the leading prediction markets companies, said it caught and fined two users for insider trading activities on its platform, including an editor at popular social media star MrBeast.
The company said there were more than a dozen active insider trading cases out of 200 cases under investigation. On Wednesday, Kalshi revealed details of two cases that have been resolved, including one against Artem Kaptur, who was identified as a staffer for James Donaldson, known for his MrBeast persona, which has been linked to his massive social media presence and the reality competition show “Beast Games.”
Kaptur allegedly worked as a visual effects editor on the show MrBeast, for which he had a $4,000 deal. Kalshi suspended him for two years and fined him more than $20,000.
“Beast Industries will not tolerate this type of behavior, whether by contestants or our own employees,” the company that hired Kaptur said in a statement. “We have a long-standing policy prohibiting employees from using company proprietary information in order to uphold the highest standards and ethics throughout our organization.”
Beast Industries said it had “launched an independent investigation” into the matter, though it encouraged Kalshi to be “more open” in communicating its findings in the future.
Insider trading is prohibited at Kalshi, a regulated exchange licensed as a “Designated Contracts Market” by the U.S. Commodity Futures Trading Commission, describing the actions it took against Kaptur and another user who used their unique knowledge to violate user policies.
In another case, user Kyle Langford allegedly placed a $200 bet on his campaign for California governor and posted it on social media, resulting in a five-year ban and a fine of 10 times the transaction amount.
Langford, who is 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 matters.
Kalshi’s two cases further highlight one of the concerns of the U.S. derivatives regulator, the CFTC. While the agency is currently developing rules to govern prediction markets, previous chairs under former President Joe Biden often lamented the CFTC’s inability to regulate the entire world. At last count, the market for small-dollar bets on a broad and nebulous topic in jurisdictions around the world could potentially pose a challenge to approximately 114 U.S. law enforcement officers.
During a recent interview with CNBC, Kalshi CEO Tarek Mansour struggled to define what constituted insider trading when asked about a hypothetical example of people in the stadium knowing what performer Bad Bunny would do during the opening song before the Super Bowl, a question that drew attention to Kalshi’s contract.
Mansour equated it to control over stock market companies, saying: “We did the same thing with Kalshi. We have the same execution mechanism.” However, he said Kalshi users must be aware of the risks of betting on information under uncertain limits. “We want to work with policymakers and regulators to make this happen,” he said.
