Kalshi, the regulated U.S. prediction-market exchange, has issued its first permanent trading ban, barring former Representative George Santos and fining him more than $70,000 for allegedly manipulating a contract linked to his own attendance at a public event, according to CoinDesk.
The penalty, detailed in a disciplinary record published on Kalshi’s website and confirmed by a company spokesperson, is the most severe sanction the exchange has imposed. It comes as prediction markets face growing scrutiny over whether they can prevent trading based on public figures’ actions and non-public information.
What Kalshi Says George Santos Did
Kalshi’s disciplinary record says Santos made a series of large trades in a market whose contracts depended on whether he attended an appearance by President Donald Trump earlier this year. The record says Santos then made public statements about his attendance in an effort to influence the market’s outcome.
Santos ultimately bet that he would not attend the event, and he did not appear. Kalshi imposed the fine in the final days of August, in addition to banning him from the platform for life.
Santos did not respond to CoinDesk’s request for comment. He was expelled from Congress in 2023 amid criminal fraud investigations and was serving a prison sentence when Trump commuted his sentence last year.
Kalshi Announces Broader Enforcement Action
Kalshi said the Santos case was one of five new enforcement matters. The other four traders received temporary bans after cooperating with investigators.
The exchange described the cases as part of its responsibility under its regulations to serve as a first line of defense against market manipulation. A spokesperson said Santos “faces additional financial penalties and will be banned permanently from trading on Kalshi given his lack of cooperation.”
The action followed a separate Commodity Futures Trading Commission order issued Friday, August 28. Under that order, former White House aide Gabriel Perez was directed to pay more than $170,000 and was barred from trading for three years over bets on “mention” contracts involving Trump.
The CFTC said Perez’s penalties were reduced because of what it described as exemplary cooperation. Perez had worked as a teleprompter operator. “Mention” contracts pay out when prominent figures speak specific words during public addresses.
Why Prediction-Market Enforcement Matters
Prediction markets have spent the past year seeking to reassure regulators and institutional partners that their platforms can resist manipulation. That effort has gained importance as companies such as Cantor Fitzgerald open Kalshi markets to institutional clients and trading volumes increase.
Self-enforcement is a key part of that argument. Platforms that investigate suspicious activity and impose penalties can cite those actions as evidence that their compliance systems are working.
Rival platform Polymarket has said it uses machine learning, blockchain analytics, trade surveillance and open-source research to identify unusual activity. The company says it has referred more than 100 cases to authorities, including bets linked to a U.S. soldier accused of using classified information to wager on the capture of Venezuela’s Nicolás Maduro and possible insider trading before U.S. military action in Iran.
Polymarket has also said its systems block the vast majority of U.S. users from accessing its international platform, as required under a 2022 settlement with the CFTC.
Kalshi’s disciplinary record illustrates how a lightly monitored market tied to one person’s behavior can become vulnerable to manipulation. BlockchainReporter has examined a similar dynamic in coverage of sophisticated traders’ structural advantage on Kalshi.
Key unanswered questions include how far federal scrutiny will extend and whether other prediction-market platforms will impose permanent bans of their own. Kalshi has said federal authorities have reportedly examined the Santos trades, while the wider regulatory environment—including state efforts to prohibit prediction markets—suggests that the industry’s enforcement practices will remain under close scrutiny through the U.S. midterm elections.
