Kalshi said Wednesday that it banned and fined a MrBeast editor and a California politician for making banned trades, the first public enforcement action taken by the US-regulated prediction market.
The company said the video editor, Artem Kaptur, violated its insider trading rules by wagering about $4,000 on YouTube streaming markets. Kaptur, whose name was included in a regulatory notice, received a two-year ban and was ordered to pay a $15,000 fine in addition to repaying more than $5,000 in profits.
Kalshi said that an internal disciplinary committee found that “he traded on material, non-public information he obtained” because of his employment with MrBeast.
A spokesperson for MrBeast’s company, Beast Industries, said it has “no tolerance” for the behavior, and it has initiated an independent investigation. The company has a “longstanding policy in place against employees using proprietary company information” as it aims to guard the “integrity of our workplace and trust with our global audiences.”
MrBeast, whose real name is Jimmy Donaldson, wrote on X last week that his team recently spent $1 million on third-party compliance teams to be on set and “verify Beast Games/MrBeast videos arnt rigged.”
The final episode of MrBeast’s Amazon Prime Video series “Beast Games” aired on Wednesday, delivering a $5 million prize to the show’s winner.
Kalshi also said it banned a California politician, Kyle Langford, who wagered $200 on his own gubernatorial candidacy, “and then posted about it on social media,” for five years. Langford, who is now running for Congress, was also fined $2,000, Kalshi said.
Kaptur and Langford didn’t respond to requests for comment.
These enforcement actions don’t carry criminal penalties. They’re carried out according to the procedures in Kalshi’s rulebook, which says that Kalshi compliance officials aim to wrap up their investigations in 12 months and lays out a hearing procedure that can take months to resolve.
The company announced earlier this month that lawyer Robert DeNault is leading its enforcement efforts, which range from enforcing its rules to working with outside authorities.
Other financial exchanges, like the New York Stock Exchange and the CME Group, also regularly announce enforcement activity against members for violations of their rules. Kalshi differs in part because many of its members are ordinary people, and not finance-industry professionals.
Beast Industries alluded to the novelty of Kalshi’s enforcement action. “We welcome Kalshi — and hopefully others in the space — also taking this issue seriously, but it only works if they are willing to communicate their findings, so we’re hopeful they’ll be more open to that in the future,” the company said.
The two bans announced on Wednesday are also being reported to the US Commodity Futures Trading Commission, a federal body that regulates futures, swaps, and options, Kalshi said.
The CFTC’s enforcement division subsequently flagged Kalshi’s enforcement actions on Wednesday in an advisory that reminded exchanges of their obligation to surveil the markets they oversee and enforce their rules. The division also noted that it could bring its own lawsuits, “in appropriate cases.”
The CFTC has said it has “exclusive jurisdiction” over prediction markets, which has caused friction with states that assert that certain markets amount to illegal gambling that is supposed to be regulated by state laws.
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