The US Is Using AI to Hunt Down Insider Trading on Polymarket

A striking development has emerged in artificial intelligence. Kate KnibbsBusinessMay 15, 2026 5:30 AMThe US Is Using AI to Hunt Down Insider Trading on PolymarketCFTC chairman Michael Selig sat down with WIRED to discuss how the agency scours Polymarket and other prediction markets for illegal activity. Photograph: Ian Maule/Bloomberg/Getty Images Save this story Save this storyFor most of the past year, it looked like prediction markets had kicked off a new golden age of fraud. On Polymarket, traders raked in fortunes from suspiciously timed bets on geopolitical events like the raid on Venezuela and the Iran War.

It wasn’t clear whether the US government would bother pursuing some of the most flagrant bad actors, since Polymarket’s crypto-based platform was technically offshore and not regulated or licensed within the country. Now, however, the Commodity Futures Trading Commission, which oversees prediction markets, wants you to know that it’s watching very, very closely. The agency is searching for suspicious behavior from traders within the United States who have been sneaking onto offshore markets, including Polymarket’s crypto platform—which is blocked stateside—by using virtual private networks.

Technical Details

“We're going to find them, and we're going to bring actions,” agency chairman Michael Selig told WIRED this week, speaking from the CFTC’s headquarters in a Washington, DC, office park called Patriots Plaza II. Selig says the agency, which is especially lean right now, is staffing up. Like so many other AI-pilled workplaces, the CFTC is also leaning into automation to handle the growing workload, including tools that analyze trading patterns and flag potential manipulation.

“You’ve got so much data,” Selig says. “When we feed it into AI, we get really great information. It can help us understand things, like where we might want to investigate, or when we might need to send a subpoena to a trader.

”In addition to proprietary surveillance systems developed in-house, the agency’s arsenal includes third-party blockchain tracing tools like Chainalysis for crypto platforms, and market abuse detection software including Nasdaq Smarts for centralized markets. (Beyond Nasdaq Smarts, the agency did not specify which AI tools it uses and declined to share more specific examples. )Prominent prediction market companies have recently started touting all the work they’re doing to catch sketchy bettors.

US-based exchange Kalshi, Polymarket’s primary competitor, eagerly announced that it has suspended and penalized customers flagged for insider trading and market manipulation. In April, after significant backlash over suspected insider trading, Polymarket announced its own partnership with Chainalysis. It was part of a broader push to crack down on market manipulation.

This advance offers important signals about the future of the sector, and the tech world is watching closely.