Former U.S. Representative George Santos has agreed to pay $35,000 to settle federal charges that he engaged in manipulative trading on the prediction market platform Kalshi. The Commodity Futures Trading Commission (CFTC) alleged that Santos profited from contracts tied to his own attendance at President Donald Trump’s State of the Union address in February. According to the regulator, Santos used misleading social media posts to influence the price of these contracts before closing his positions for a profit of more than $17,500.
Under the terms of the settlement, Santos will forfeit his trading profits and pay an additional $17,500 civil penalty. He has also accepted a three-year ban from trading on prediction markets. While the agreement resolves the federal investigation, Santos did not admit to any wrongdoing. His legal counsel, Joseph Murray, stated that the former congressman chose a practical resolution to avoid the costs and time associated with protracted litigation, emphasizing that the settlement should not be viewed as an admission of guilt.
The CFTC investigation found that Santos created a Kalshi account shortly after the platform listed the State of the Union attendance contract. Investigators noted that Santos traded exclusively on the market involving himself, using social media to create price fluctuations that benefited his financial positions. The platform itself, Kalshi, reported the suspicious activity to regulators and has stated it will pursue its own internal enforcement actions to potentially reimburse affected traders.
This case marks a significant moment for the growing prediction market industry, which is currently facing increased regulatory scrutiny. As these platforms gain popularity among retail investors, federal agencies are closely monitoring them for signs of insider trading and market manipulation. For Santos, this settlement is the latest in a series of legal challenges following his 2023 expulsion from Congress and subsequent conviction on federal fraud charges, for which he was later granted clemency.