US Representative Ritchie Torres is preparing to introduce legislation aimed at curbing insider trading on prediction markets, following scrutiny around a highly profitable wager tied to the sudden capture of Venezuelan President Nicolás Maduro.
In a Sunday post on X, Punchbowl News founder Jake Sherman said Torres plans to introduce the Public Integrity in Financial Prediction Markets Act of 2026. The bill would prohibit federal elected officials, political appointees and executive branch employees from trading prediction market contracts linked to government policy or political outcomes when they have nonpublic information through their official duties.
“The restriction applies to buying, selling, or exchanging prediction market contracts tied to government policy, government action, or political outcomes on platforms engaged in interstate commerce,” Sherman said, citing a source familiar with the matter.
The bill mirrors existing insider trading standards in traditional financial markets but would extend them to the prediction market sector.
Related: Polymarket traders see just 21% chance of Bitcoin hitting $150K this year
Bet on Maduros ouster turns into $400,000 overnight
The proposal comes days after a newly created account on Polymarket placed roughly $32,000 on a contract predicting Maduros removal from power by Jan. 31, 2026. Hours later, US forces reportedly captured the Venezuelan leader, sending the contract to settlement and netting the trader more than $400,000 in profit.
New trader wins big on Maduros arrest. Source: Joe Pompliano
The account had limited prior activity, with the Maduro trade accounting for the vast majority of its gains, raising more suspicions about whether someone might have exploited political or military information through the prediction platform.
In response to Sherman‘s post, Kalshi’s press relations account said its rules prohibit insiders or decision-makers from trading on material nonpublic information.
Related: Fed rate cuts in 2026 could drive retail back to crypto: Clear Street
Polymarket blames third-party tool for account breaches
As Cointelegraph reported, reports of account breaches surfaced this week after multiple Polymarket users said their balances were drained following suspicious login attempts. Users on Reddit and X described seeing several unauthorized login attempts before their positions were closed and funds reduced to near zero, despite no signs of compromise on their devices or other services.
In response, Polymarket said it identified and fixed a security issue caused by a vulnerability introduced by a third-party authentication provider. The company said the problem affected only a small number of users, has been fully remediated, and poses no ongoing risk, adding that impacted users will be contacted.