A US Army Special Forces member accused of leveraging insider information regarding the operation to apprehend Venezuelan leader Nicolás Maduro is seeking to have a civil enforcement case against him thrown out.
Master Sgt. Gannon Ken Van Dyke reportedly earned $409,000 through trading $33,000 across various Polymarket contracts, such as “Maduro Out by January 31, 2026?” and “US Forces in Venezuela?”
Shortly thereafter, he was seen on the USS Iwo Jima in military attire alongside others involved in the operation following Maduro’s capture.
In April, Van Dyke was indicted on a multitude of criminal counts, including theft of government information, commodities fraud, wire fraud, and money laundering.
Additionally, he is facing a civil lawsuit initiated by the Commodity Futures Trading Commission (CFTC), which contends that he breached federal commodities laws by exploiting confidential government data for trading Polymarket event contracts.
Geopolitical Betting
In a pre-motion conference letter submitted this week, Van Dyke’s legal representatives urged the court to dismiss the CFTC case, asserting that the Polymarket contracts were merely geopolitical bets on whether Maduro would be ousted, rather than federally regulated financial instruments.
“Such geopolitical wagers do not qualify as ‘swaps’ under the Commodity Exchange Act [CEA], and activities related to these event contracts cannot form a basis for liability,” the motion states.
Van Dyke also disputes the validity of the CFTC’s expansive anti-fraud rule, arguing that the agency overstepped its congressional mandate when implementing the regulation and consequently cannot rely on it in his case.
This argument targets the fundamental legal theory surrounding prediction markets, which suggests that specific event contracts could be categorized as “swaps” under the CEA, thus falling under federal jurisdiction.
It aligns with a broader trend of litigation from various states across the US, which claim that prediction market contracts should be categorized as sports betting or gambling activities subject to regulation by state gaming authorities instead of federal commodities regulators.
Judgment Pending
The verdict on this issue remains undecided. Courts have issued conflicting decisions regarding whether such contracts meet the criteria to be classified as swaps according to the CEA.
Prediction market platforms like Polymarket and Kalshi are facing increased scrutiny from lawmakers and regulators, as concerns mount over the potential for individuals with access to nonpublic government information to exploit it for monetary gain.
The criminal indictment claims that Van Dyke attempted to mask both the origin of his information as well as his involvement in the trades.
Prosecutors allege he tried to erase his Polymarket profile and altered the email connected to his cryptocurrency exchange account after media outlets reported on the suspicious trading patterns.
If found guilty of all charges, Van Dyke could be sentenced to a maximum of 60 years in federal prison.