The US Department of Justice and the Commodity Futures Trading Commission have charged a software engineer with insider trading for placing bets on prediction markets using confidential information from his employer, a major internet search company. The complaints, filed May 27, follow the first criminal and civil cases accusing someone of insider trading in prediction markets — but those earlier cases involved classified national security information.
This time, the charges center on commercial secrets. According to the complaints, the software engineer accessed an internal company tool to learn the non-public results of the company’s “Year in Search” list for 2025, then traded event contracts tied to whether specific people would appear on that list.
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The engineer risked about $2.7 million on roughly 25 outcomes that the market considered unlikely, the filings state. When the company released its Year in Search results, the trades returned a profit of about $1.2 million — with near-perfect accuracy.
Those highly profitable bets quickly drew attention. Other market participants noticed, and online news reports raised questions about how someone could predict the results so consistently before the official release.
Inside the alleged scheme
The company keeps its Year in Search results under wraps as part of a coordinated marketing campaign designed to drive engagement and increase demand for advertising, according to the complaints. Company policies restricted access to that information and strictly controlled when and how it could be shared.
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The complaints allege that the employee knew he was profiting from information he was required to keep confidential. The filing leaves open questions about whether a confidentiality policy alone is sufficient to expose someone to insider trading liability in prediction markets, and whether the government must prove actual knowledge or intent to misuse information the trader knows is confidential.
Cross-border questions
Unlike the first prediction market insider trading prosecutions — which involved a US citizen trading from the United States on classified military information — the connection to US soil in this case is thinner. The software engineer was reportedly a resident of Switzerland who accessed company data and placed trades while in Switzerland.
He also traded on a non-US market that runs on the blockchain, not on a CFTC-registered exchange. The CFTC alleges that the unregistered overseas market is “operated” by a Panamanian corporation and a Delaware corporation, both of which list their principal place of business in New York. Employees in New York made decisions about which event contracts to list, the complaint says.
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Wider implications for prediction markets
These cases should matter to a broader set of market participants than the national-security prosecutions did, the filing notes. Event contracts now cover nearly every aspect of public life — customer trends, platform metrics, product plans, sales data, and other internal analytics that could influence a contract’s value. Countless employees have access to that kind of commercial data.
The CFTC’s assertion of jurisdiction over trades on a foreign blockchain-based market also raises questions about how far the agency plans to police activity outside the US. It has recently been working to clarify what it sees as the scope of its cross-border authority. Whether the agency will continue to take an active role in policing misconduct that happens largely overseas remains to be seen.
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