Former Republican Congressman George Santos has agreed to pay a $35,000 settlement to the Commodity Futures Trading Commission (CFTC) following an investigation into his trading activities on the prediction marketplace Kalshi. The settlement includes disgorgement of more than $17,000 in profits from what the CFTC deemed unlawful trading, along with a $17,500 fine. Santos also faces a three-year ban from trading products regulated by the CFTC, which extends beyond prediction markets to include futures and other derivatives.
The investigation focused on trades Santos made on a Kalshi contract regarding his attendance at the February 2026 State of the Union address. The CFTC found that Santos traded on this contract while making public statements, including posts on X, that influenced the contract's price. For example, he posted about attending the event, and then later claimed to be stuck at an airport, making over $17,500 from these price movements. The agency stated that Santos acted willfully or recklessly by making misleading statements to benefit his financial positions.
Santos's lawyer, Joseph Murray, stated that Santos settled the matter to "put this matter behind him" and did not admit to any wrongdoing. Kalshi, the platform on which the trades occurred, had reported Santos to regulators and indicated it would pursue its own enforcement actions. The CFTC's action serves as a precedent for applying anti-manipulation rules to event contracts, particularly when individuals with control over an outcome trade on those outcomes. This case highlights the potential for market manipulation when a contract's subject can directly influence its price and outcome.
