In brief
- Robert DeNault sifted through a “backlog” of suspicious trades for Kalshi.
- The prediction market plans on publishing enforcement actions against its users.
- Kalshi CEO Tarek Mansour said some cases have been referred to law enforcement.
When Robert DeNault joined Kalshi’s four-person legal team in October, it was under the assumption that his background investigating white collar crimes could come in handy.
Now serving as the prediction market’s head of enforcement, the former associate at law firm White & Case told Decrypt that Kalshi is preparing to disclose a wave of disciplinary actions that have been taken against users—the result of a monthslong effort to clean up a “backlog” of potential trading violations.
“It’s taken a big chunk of my first few months here to get through these,” he said. “We’re going to continue to post these, […] but you’ll see it start in the coming weeks.”
The shift comes as betting patterns—such as a $400,000 payout on rival platform Polymarket linked to the capture of Venezuelan President Nicolás Maduro last month—fuel skepticism regarding market integrity. Rep. Ritchie Torres (D-NY) is among lawmakers that have responded by introducing legislation to prevent Kalshi and its peers from allowing insiders to profit, urging for stricter guardrails against corruption.
For DeNault, answering this skepticism has required professionalizing Kalshi’s disciplinary framework to mirror giants like the New York Stock Exchange or Nasdaq. Since September, he’s been “beefing out” a role designed to distinguish legitimate information asymmetry from illegal activity, he said.
According to a Dune dashboard, Kalshi has generated roughly $42.7 billion in cumulative trading volume. At $6.8 billion this month, a large chunk of that activity has coincided with the Super Bowl, where Kalshi offered markets on topics including the halftime show’s first song.
Despite some expert claims that insider trading in prediction markets is a feature, not a bug, DeNault described the discourse as “mind-numbing.” He argued that the sentiment degrades trust in markets, and that volume only follows when participants feel like they are getting a “fair shake.”
“I don’t understand how anybody, whether you know you’re a trader or you’re a regulated exchange, can, with a straight face, argue that that type of trading that violates a legal duty and violates the law is a positive benefit in a market,” he said.
A key focus of Kalshi’s centers on policing “source agency” trading. If a trader is affiliated with the entity responsible for a contract’s resolution, then they are barred from the market. Even if they didn’t profit, these “exchange violations” result in public disciplinary notices, DeNault said.
To illustrate how broadly the “legal duty” that insiders have to refrain from trading on material, nonpublic information (MNPI) can be interpreted by Kalshi, DeNault pointed to the Super Bowl halftime show featuring a performance from Bad Bunny.
Staff, such as the background performers dressed as bushes, likely signed confidentiality clauses, he said. Misappropriating that rehearsal access for personal gain would constitute a breach of contract and a clear violation of Kalshi’s rules, DeNault added.
“Those are types of policing activity that we might see on the exchange that you wouldn’t see necessarily from a federal regulator,” he said. “‘Insider’ does have a real legal meaning, even though it’s not actually defined in any statute.”
Meanwhile, the CFTC is losing muscle as enforcement attorneys leave its Chicago office in droves, per Barron’s. Chair Mike Selig has signaled that the agency is building toward an AI-driven “minimum effective dose of regulation,” using technology to fill its gaps.
Kalshi CEO Tarek Mansour has used the divide over insider trading to sharpen his stance against competitors, arguing that it erodes the trust necessary for markets to survive.
Earlier this month, Masour said on X that Kalshi’s surveillance system, Poirot, has conducted over 200 investigations. Several cases have been referred to law enforcement, he noted.
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