Looking at the US-Iran ceasefire event, the regulatory dilemma between Polymarket and the CFTC

April 7, 2026, U.S. President Trump announced a two-week ceasefire agreement with Iran. However, just hours before the official announcement, three independent markets—cryptocurrency prediction markets, crude oil futures markets, and stock options markets—simultaneously saw highly precise bets placed, sparking widespread suspicion of insider trading.

On Polymarket, a cryptocurrency prediction platform built on the Polygon blockchain, at least 50 new accounts that had never placed a bet before concentrated their bets on “Ceasefire will be reached” prior to Trump’s ceasefire announcement, collectively earning hundreds of thousands of dollars. Meanwhile, the crude oil futures market experienced a large sell-off during the inactive period at 19:45 GMT (03:45 local time the next day), with investors selling approximately 8,600 Brent and U.S. crude futures contracts, totaling about $950 million in positions. Additionally, an unidentified trader bought 6,800 S&P 500 call options around 10:20 a.m. (Eastern Time) that morning, with a position cost of about $12 million and a single-day profit of approximately $23 million.

These three large bets across different markets, all linked to the same geopolitical event, were executed within a very short window before the news was released. Whether such dense, precise trading is merely “coincidence” or driven by some information advantage warrants in-depth analysis.

New Accounts’ Concentrated Bets: What On-Chain Data from Polymarket Reveals

Polymarket operates on the Polygon blockchain, where all transaction records are publicly accessible, enabling external researchers to verify suspicious activities on-chain. According to publicly available data from the crypto analytics platform Dune, at least 50 accounts that had no prior betting history suddenly placed concentrated bets on “Yes” just hours before Trump’s official ceasefire announcement.

One account’s timeline is particularly noteworthy: it was created around 10 a.m. that morning (Eastern Time), then invested approximately $72k at an average price of 8.8 cents to bet on the ceasefire, ultimately cashing out for a profit of about $200k. Another account was created just 12 minutes before Trump’s tweet, investing about $32k at a price of 33.7 cents, and earning roughly $48.5k in profit.

From a statistical perspective, the fact that multiple new accounts with no prior trading history simultaneously established large positions on the same event, with creation times highly concentrated within the sensitive window before the announcement, is highly unlikely to be random. U.S. Republican Congressman Blake Moore from Utah stated that these trades “are highly unlikely to be well-intentioned,” and are more probably driven by insiders with access to non-public information.

Cross-Market Linkages: The Logic Behind $950 Million Oil Sell-Off and $23 Million S&P 500 Profit

The abnormal bets in prediction markets are not isolated incidents. Simultaneously, the crude oil futures market and the S&P 500 options market also experienced large-scale, precise trades.

In the oil market, the trades were concentrated during the post-settlement inactive period. Data from the London Stock Exchange Group (LSEG) shows that around 19:45 GMT, investors sold approximately 8,600 oil futures contracts worth about $950 million. Less than three hours later, Trump officially announced the ceasefire. The market reacted sharply, with crude futures plunging about 15% at the open on Wednesday, falling below $100 per barrel. Analysts note that such large short positions are rarely executed during the inactive post-settlement period, as traders typically split orders via algorithms to reduce market impact, rather than executing all at once at a single time.

Similarly, the stock options market saw targeted positioning. Around 10:20 a.m. (Eastern Time), a trader bought 6,800 S&P 500 call options with a strike price of 6,950, expiring on May 8, with a premium of about $12 million. At that time, there were no positive signals in the market; Trump had even set a deadline for military action. Hours later, the ceasefire was announced, and the S&P 500 surged 2.5% on April 8. The premium for this option soared from 17.65 points to 50 points, with a total market value of about $35 million. After deducting initial costs, the trader’s profit for the day was approximately $23 million.

The common features of these three trades are: all are related to the “U.S.-Iran ceasefire” geopolitical event, with positions established within a narrow window of 3 to 12 hours before the announcement, and executed in a concentrated manner. This cross-market, cross-asset coordinated betting pattern is difficult to explain under normal market information conditions.

Why Prediction Markets Are Sensitive “Leak Windows” for Insider Information

Prediction markets have unique characteristics in their information discovery mechanisms, making them among the highest-risk areas for insider trading. Unlike traditional financial markets such as crude oil futures and stock options, crypto prediction markets inherently lack robust identity verification, trading surveillance, and anomaly detection.

The core function of prediction markets is to aggregate dispersed information into collective forecasts through price signals. This mechanism relies on participants acting based on their own information. However, when the information source is a major non-public message, this mechanism shifts from an “information aggregation tool” to a “channel for monetizing informational advantage.” Traders with insider knowledge can establish positions in prediction markets to directly convert non-public information into financial gains. The pseudo-anonymous nature of crypto prediction markets significantly reduces the risk of traceability.

From a macro perspective, prediction markets create an information arbitrage chain with traditional financial markets. When certain information can simultaneously influence commodity prices, stock index movements, and political event probabilities, traders holding that information can establish positions across multiple markets to maximize the economic value of their informational advantage. The simultaneous large bets on crude oil, S&P options, and Polymarket during the same window in the U.S.-Iran ceasefire case exemplify this multi-market arbitrage potential.

White House Internal Warning: What the March 23 Memo Revealed

It’s worth noting that this is not the first time the U.S. government has expressed concern over this issue. On March 23, 2026, hours after Trump announced a pause in attacks on Iran, the White House Office of Management and Budget sent a warning email to all staff, explicitly reminding employees not to abuse their authority to make precise timing bets in futures markets.

The White House confirmed the authenticity of this warning email. Trump spokesperson Davis Ingle responded, “The only special interest guiding President Trump’s decisions is the greatest interest of the American people.” However, the issuance of this internal warning itself indicates a high level of alert within the government regarding information leaks and insider trading risks.

About 15 minutes before the policy shift on March 23, data from the Dow Jones market showed that over $760 million worth of oil futures contracts had already been traded, completed in less than two minutes. This pattern closely resembles the timing and trading mode of the March 23 event, suggesting that such precise bets are not isolated but part of a recurring pattern.

Seven House Democrats Pressure the CFTC: Core Disputes in Jurisdiction

On April 7, 2026, seven House Democrats led by Representatives Jim McGovern and Seth Moulton formally sent a letter to CFTC Chairman Michael Selig, demanding an explanation for why the agency had not taken action against event contracts involving war and potential insider trading on offshore prediction markets. They requested a response by April 15.

The lawmakers cited the Commodity Exchange Act, stating that the CFTC already has the authority to act. The law authorizes regulation of OTC swaps with “direct and significant contact” with U.S. commerce, and provisions prohibiting betting related to terrorism, assassination, and war also apply to offshore markets. They directly asked whether the CFTC believes it has jurisdiction over insider trading in these markets and why no public action has been taken.

However, the CFTC’s regulatory stance faces complex legal challenges. The agency is actively asserting federal jurisdiction over prediction markets and has recently sued Arizona, Illinois, and Connecticut to prevent states from blocking such platforms under gambling laws. CFTC Chairman Selig publicly stated that states are attempting to “abolish federal law,” and the jurisdictional tug-of-war between federal and state authorities continues.

Meanwhile, CFTC enforcement chief David Miller adopts a pragmatic stance, saying the agency will prosecute cases involving leaks or misappropriation of information but will not allocate resources to “less important” cases. This indicates a prioritization of enforcement efforts toward cases that significantly threaten market integrity.

The Regulatory Vacuum in Prediction Markets: From Kalshi to Polymarket’s Compliance Path

The regulatory challenges facing prediction markets have been developing over time. After Polymarket was banned from serving U.S. users in 2022, it sought compliance pathways by acquiring licensed exchanges and clearinghouses, and in November 2025, received a no-action letter from the CFTC, clarifying its operational legal framework in the U.S.

On March 23, 2026, Polymarket officially announced an update to its “Market Integrity Rules,” explicitly banning three types of insider trading—trades based on stolen confidential information, illegal message sources, and trades influencing outcomes—and strengthening its market manipulation countermeasures. These new rules apply to both its DeFi platform and its U.S.-regulated exchange.

Nevertheless, this compliance effort does not fully dispel market doubts about regulatory effectiveness. First, Polymarket’s DeFi platform still runs on the Polygon chain, with weak identity verification and trading surveillance compared to traditional finance. Second, enforcement across offshore markets faces legal hurdles; even if the CFTC identifies insider trading, investigations and enforcement are difficult. Third, jurisdictional disputes between the CFTC and state gambling regulators remain unresolved, leaving regulatory uncertainty.

Summary

The three market anomalies during the U.S.-Iran ceasefire—new accounts’ concentrated bets on Polymarket, a $950 million crude oil sell-off, and a $23 million profit from S&P 500 options—occurred within highly overlapping time windows, with interconnected underlying assets, and were executed in concentrated, precise, and atypical ways. This cross-market information transmission reveals the particular risks of prediction markets in insider information detection—while their core function is to aggregate dispersed information, in the absence of effective regulation, they can also serve as direct channels for monetizing informational advantages.

From a systemic industry perspective, this incident will prompt global regulators to reassess the legal positioning and regulatory frameworks of prediction markets. The CFTC is actively establishing its federal jurisdiction, but enforcement resource allocation, cross-border jurisdictional coordination, and the division of authority between federal and state agencies remain unresolved issues. For crypto market participants, the regulatory trajectory of prediction markets will directly impact the compliance boundaries and innovation potential of event contract products. Ongoing policy developments in this area merit close attention.

FAQ

Q: How many suspicious new accounts appeared on Polymarket during this incident?

Based on analysis from the crypto analytics platform Dune of Polymarket’s on-chain data, at least 50 accounts with no prior betting history suddenly concentrated bets on “Ceasefire will be reached” before Trump’s announcement, all being newly created or first-time betting accounts.

Q: What abnormal trades occurred simultaneously in the oil and stock options markets?

In the oil futures market, about $950 million worth of contracts were sold in the less-active post-settlement period just before the ceasefire news, with approximately 8,600 contracts traded. Meanwhile, a trader spent about $12 million to buy S&P 500 call options, earning roughly $23 million in profit for the day.

Q: Has the CFTC launched an official investigation?

Seven House Democrats have formally written to CFTC Chairman Selig, demanding an explanation by April 15 for why no action has been taken against contracts involving war and potential insider trading. CFTC enforcement chief Miller stated they will prosecute leaks or misappropriation cases but will not focus on “less important” cases.

Q: What compliance adjustments has Polymarket made?

Polymarket announced an update to its “Market Integrity Rules” on March 23, 2026, explicitly banning three types of insider trading and strengthening anti-manipulation measures. These rules now apply to both its DeFi platform and its U.S.-regulated exchange.

Q: What obstacles exist in identifying insider trading in practice?

According to CFTC rules, insider trading requires trading based on “material non-public information” obtained through breach of duty, fraud, or improper disclosure. Investigations face multiple hurdles, including penetrating accounts, obtaining communication records, and tracing cross-exchange trades, making effective prosecution difficult without a complete evidence chain.

Q: How might this incident influence the future regulation of the crypto industry?

This event intensifies jurisdictional disputes between the CFTC and state regulators, accelerating legislative efforts to regulate prediction markets. The CFTC’s lawsuits against three states to establish federal jurisdiction, along with upcoming appellate rulings, will significantly shape the regulatory landscape for prediction market products.