For Polymarket, Monday’s steps included updating integrity rules and clarifying types of insider trading conduct, like trading on insider information or illegal tips, which are prohibited behaviors on the firm’s DeFi platform and its CFTC-regulated U.S. platform.
"These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built,” Polymarket Chief Legal Officer Neal Kumar said in a statement.
“As Polymarket continues to scale,” he added, “we will build on our foundation with clear communication to Polymarket’s users to ensure our markets do what they do best—surface truth."
Polymarket said it uses a “multi-layered monitoring system” to detect potential violations of its insider trading rules on its DeFi platform, or its international version. On the U.S. side, it works with partners and a real-time control desk to “identify unusual or disruptive trading activity.”
Monday’s advances from Kalshi take a more proactive approach to squashing insider trading on the platform, like in the example of a coach trading on a sporting event they are tied to. The firm announced it has established a new policy disallowing members connected to college or professional sports—like coaches or players—from trading markets “associated with the sports they are involved with.”
The firm is also implementing preemptive screening for both athletic parties and politicians using screening lists it has developed, which will allow it to block trades before they even occur.
Insider trading allegations on prediction markets have drawn considerable attention and scrutiny this year, highlighted by anonymous traders winning major sums in markets related to subjects like government actions.
Potential violations of the insider trading rules on Polymarket can be reported to the platform via Discord or email, its updated rules say. Details on how the investigations unfold from there, or how many reports are being made are not immediately clear. Kalshi has also implemented whistleblower functionality directly into its market pages, allowing individuals to flag potential insider trading behaviors.
Representatives for Polymarket and Kalshi did not immediately respond to Decrypt’s request for comment.
