While Congress presses U.S. sports leagues and their licensed betting partners to tighten safeguards around integrity, executives in the world of predictions are seemingly manipulating bets tied to their own words — and bragging about it.
At the end of Coinbase’s quarterly earnings call Thursday, CEO Brian Armstrong revealed he’d been tracking what people were wagering he’d say on event-contract platforms like Kalshi and Polymarket. Then, before hanging up, he rattled off the following words:
“Bitcoin, Ethereum, Blockchain, staking and Web3.”
Those five words instantly cashed bets tied to his remarks on Kalshi, which saw more than $80,000 in trading volume across the markets, while Polymarket handled roughly $4,000.
Playing with prediction markets
“lol this was fun – happened spontaneously when someone on our team dropped a link in the chat,” Armstrong wrote afterward on X.
Coinbase holds stakes in both Kalshi and Polymarket plans to offer event contracts on its own platform in the near future, Armstrong revealed after the call.
A Coinbase spokesperson told LSR the comments were made “in a lighthearted, offhand way referencing online discussion around the earnings call,” and added Coinbase maintains “robust policies and internal controls that prohibit employees from contributing to prediction markets related to the company.”
Armstrong’s “lighthearted” X post drew a range of replies:
- “This is the most wholesome market manipulation I’ve ever seen”
- “Not sure why you find this funny, dude — you’ll hear from my lawyer”
- “I would have thought you ran this by legal lol.”
Predictions a new frontier of insider trading?
The incident underscores a regulatory blind spot in an industry that now lets users wager on everything from what a CEO will say to how many times President Trump will post on social media or whether he’ll smoke marijuana with Joe Rogan.
Earlier this year Polymarket’s $200 million “Zelensky suit” market spiraled into a dispute over whether Ukraine’s president had actually worn a suit, flipping repeatedly after governance-token votes. Another high-volume market tied to a U.S.-Ukraine minerals deal was later hit by a governance attack in which someone with access to the platform’s settlement system allegedly manipulated the vote to force an early, incorrect outcome that was never reversed.
These platforms operate under a federal derivatives framework, not state gaming laws. As CFTC-regulated designated contract markets they can self-certify new markets and begin taking bets without prior approval, so long as it later proves they aren’t “readily susceptible to manipulation” though that would depend on the question being asked.
Kalshi’s rules prohibit trading by anyone with material nonpublic information or the ability to influence an outcome, and the exchange says it monitors for manipulation. But there’s no federal insider-trading law for event contracts comparable to the SEC’s Rule 10b-5 for securities.
The booming industry no one’s policing
CFTC enforcement has so far focused on registration and compliance, not misuse of privileged information.
Outgoing Commissioner Kristin Johnson warned the sector has “too few guardrails and too little visibility,” when she left the agency in August.
The agency itself remains largely unstaffed under the Trump administration, which has yet to fill four of five commissioner seats. Trump’s former nominee Brian Quintenz was withdrawn earlier this year after emails surfaced questioning his conflict of interest as a Kalshi board member while being vetted to lead the very agency that regulates the platform.
That vacuum has left the CFTC mostly inactive as prediction market activity surges, particularly around sports contracts, which have sextupled the valuations of Kalshi and Polymarket in less than a year. The rapid expansion has triggered lawsuits from state and tribal gaming regulators calling those offerings unlicensed gambling. Major sports leagues like the NBA and MLB, meanwhile have urged the agency to adopt the same integrity and player protection safeguards required of licensed sportsbooks.
Trump ties to predictions
Adding to the political entanglements, Truth Social just announced a partnership with Crypto.com to offer prediction markets directly on the president’s social-media platform.
Just a week before Trump was sworn in as president, Kalshi named his son, Donald Trump Jr., as a strategic adviser. Three days later, it launched its first sports markets, despite a CFTC request to pause them. A regulatory roundtable meant to address their overlap with sports betting was scheduled, then abruptly canceled.
Trump Jr. then joined Polymarket as an adviser in August, a month after the Department of Justice cleared the company to re-enter the U.S., lifting a ban imposed under the Biden administration.
Federal attention fixed on regulated betting
That vacuum stands in stark contrast to licensed sportsbooks, which answer to state gaming commissions that require background checks, integrity monitoring, age verification, responsible-gaming tools, and marketing audits.
Infractions are routine but transparent: from Penn Entertainment’s $15,000 fine after ESPN host Rece Davis described a bet on air as a “risk-free investment,” to Caesars’ $150,000 penalty for missing responsible-gaming disclaimers, and most recently the wave of federal betting scandals involving professional coaches and players.
Two congressional committees have demanded answers from NBA Commissioner Adam Silver on what the league and its licensed sportsbook partners are doing to prevent insider betting and protect game integrity. The push follows federal indictments alleging a bet-manipulation scheme involving a current player and head coach, a case first flagged via irregular wagering patterns detected by licensed operators and their integrity monitors, oversight mechanisms that prediction markets are not required to maintain.
Meanwhile, Rep. Paul Tonko has renewed calls for national standards on gambling advertising, affordability checks, and AI use. Those measures would not extend to Kalshi or Polymarket, which operate nationwide without state licenses, pay no local taxes or regulatory fees and offer sports markets in states like California and Texas, where sports betting remains illegal.
