On April 23, 2026, the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice (DOJ) announced parallel civil and criminal actions against Gannon Ken Van Dyke, an active-duty U.S. Army Special Forces master sergeant, for allegedly using classified nonpublic information to trade on event contracts listed on a widely used online prediction market (CFTC | DOJ).
The case marks the first time the CFTC has charged an individual with insider trading involving event contracts and the first time the agency has invoked the so-called “Eddie Murphy Rule” to bring charges based on the misuse of government information. The actions follow closely on the heels of CFTC Division of Enforcement Director David Miller’s March 31, 2026 remarks (noted in a prior Alston & Bird advisory) identifying insider trading in prediction markets as a key enforcement priority for the CFTC and offer an early indication of how and when the DOJ and CFTC may police prediction market abuse going forward.
The Alleged Scheme
According to the CFTC's complaint and the DOJ's indictment, Van Dyke was involved in Operation Absolute Resolve, a U.S. military operation to capture former Venezuelan President Nicolás Maduro and his wife, Cilia Flores. During Van Dyke’s involvement, beginning around December 8, 2025 and continuing through at least January 6, 2026, he had access to sensitive, nonpublic, classified information. As a service member, Van Dyke promised to “never divulge, publish, or reveal by writing, word, conduct, or otherwise … any classified or sensitive information” relating to military operations, and vowed a duty of trust and confidentiality.
While in possession of classified, nonpublic information about military operations related to Venezuela and Maduro, on December 26, 2025, Van Dyke allegedly created an account with the prediction market and began trading on Maduro- and Venezuela-related event contracts (which settle based on whether a specified event does or does not occur). Between December 27, 2025 and the evening of January 2, 2026, Van Dyke traded 13 times, purchasing shares of contracts that predicted, among other things, that Maduro would be “out” by January 31, 2026 and that U.S. military forces would be “in Venezuela” by January 31, 2026.
Van Dyke allegedly wagered $33,934 and, after Maduro was captured, the prediction market settled the contracts in his favor, reportedly with a profit of $409,881. Van Dyke allegedly attempted to cover his tracks by moving most proceeds to a foreign cryptocurrency vault, funneling them into a newly opened brokerage account, requesting deletion of his prediction market account under false pretenses, and changing his profile email to an address not registered in his name.
Parallel Enforcement Actions
On April 23, 2026, the U.S. Attorney’s Office for the Southern District of New York unsealed a five-count indictment charging Van Dyke with crimes including (criminal) violations of Section 6(c)(1) of the Commodity Exchange Act (CEA), which prohibits the use of any manipulative device in connection with any swap; Section 4c(a)(3) of the CEA, which prohibits government employees from entering into swaps while in possession of material nonpublic information; and Section 4c(a)(4)(C) of the CEA, which prohibits the misappropriation of nonpublic government information that may affect the price of any swap. The same day, the CFTC filed a complaint against Van Dyke, alleging civil violations of the same provisions of the CEA and seeking disgorgement, monetary penalties, and other relief. In both cases, the government has asserted that the event contracts at issue constitute “swaps” under the CEA.
In statements accompanying the enforcement actions, senior DOJ and CFTC officials underscored their intent to pursue insider trading across prediction markets. U.S. Attorney Jay Clayton stated that “[p]rediction markets are not a haven” for trading on misappropriated classified information, calling Van Dyke’s conduct “clear insider trading.” Acting Attorney General Todd Blanche likewise stated that “federal laws protecting national security information fully apply” to prediction markets; CFTC Chair Michael S. Selig stated that “anyone who engages in fraud, manipulation, or insider trading … will face the full force of the law”; and Miller described the enforcement action as historic, noting that Van Dyke abused his duty of trust by misappropriating highly sensitive information and pledging continued vigilance in policing illegal use of inside information in prediction markets.
The Eddie Murphy Rule
The CFTC action against Van Dyke represents the first application of the so-called “Eddie Murphy Rule,” enacted as part of the Dodd–Frank Act and codified as Section 4c(a)(4) of the CEA in 2010. The rule’s name derives from the 1983 movie Trading Places, in which two characters (played by Eddie Murphy and Dan Akroyd) conspire to profit from trades in frozen orange juice concentrate futures contracts using a stolen and not-yet public Department of Agriculture orange crop report. Gary Gensler, chair of the CFTC at the time, testified before Congress that the misconduct in Trading Places was not actually illegal under the CEA and urged lawmakers to institute a ban on insider trading using nonpublic information misappropriated from a government source. Congress responded by enacting one of the statutory provisions Van Dyke is alleged to have violated.
Applying the CEA to Prediction Markets
As Miller previewed last month, the division views event contracts as swaps within the CFTC’s jurisdiction and intends to leverage CEA provisions relating to insider trading, market abuse, and anti-fraud authorities to police misconduct on prediction markets. The Van Dyke case puts those commitments into practice.
These actions also send a strong statement at a time when the CFTC’s jurisdiction over prediction markets is being challenged by state regulators, who argue that event contracts are a form of gambling and should be subject to state regulation. In response, the CFTC has now initiated lawsuits against Arizona, Connecticut, Illinois, New York, and Wisconsin, asserting exclusive jurisdiction over prediction markets.
The CFTC’s Divisions of Enforcement and Market Oversight have issued staff advisories on prediction markets (discussed in a prior Alston & Bird advisory), and the regulator recently published an advance notice of proposed rulemaking (ANPR) to obtain industry feedback on how and to what extent the CFTC should update its rules to account for the unique risks associated with prediction markets. The message from the CFTC is clear: it claims exclusive jurisdiction of prediction markets and will use its authority to police misconduct in these markets.
Prediction Markets as Self-Regulatory Organizations
In addition to the actions brought by the CFTC and DOJ, market participants are reminded that a third layer of enforcement authority exists when trading event contracts: the prediction markets themselves have the authority and the obligation to prevent, detect, and punish misconduct on their platforms, including insider trading. In the United States, prediction markets are CFTC-registered designated contract markets (DCMs), a type of self-regulatory organization with the ability to discipline traders for any breach of their rules. DCMs have broad authority to prohibit and police fraudulent and manipulative activity on their platforms and may also rely on a more expansive definition of “insider trading” by defining and prohibiting a larger class of “insiders” from its markets. This is a space to watch as well.
Looking Ahead
The current degree of public interest in and demand for prediction markets and event contracts is unprecedented, and a record number of applicants are seeking approval to register as DCMs with the CFTC and futures commission merchants (a type of derivatives broker) with the National Futures Association to create new, intermediated prediction markets. Industry comments on the CFTC’s ANPR on prediction markets are due on April 30, 2026, and we expect a proposed rule or guidance to follow later this year.
Alston & Bird’s White Collar, Government & Internal Investigations; Financial Services; and Investment Funds teams will continue to monitor this dynamic area and will provide additional updates as it evolves. Participants in these markets should expect increasing regulatory and enforcement scrutiny in the coming months and must carefully consider this heightened risk when taking positions in them based on nonpublic information.
If you have any questions, or would like additional information, please contact one of the attorneys on our White Collar, Government & Internal Investigations, Financial Services, or Investment Funds teams.
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