Kalshi lays down first lifetime ban for ex-member of Congress George Santos

The prediction market platform banned Santos for manipulation as part of the industry’s ongoing efforts to show it’s dealing with bad behavior.

— Kalshi has issued its first lifetime trading ban, targeting ex-Congressman George Santos, accusing him of trading on his own appearance at President Donald Trump’s most recent State of the Union address.

— At the same time, the Commodity Futures Trading Commission issued a penalty and ban against a former White House teleprompter operating for placing bets on words he knew Trump was planning to utter in remarks.

— Polymarket is also reportedly focused on bad actors that may try to manipulate midterm elections.

Ousted former U.S. Representative George Santos has earned groundbreaking status as the first individual banned for life from prediction market platform Kalshi in light of a record of allegedly manipulative trades that earned the ex-politician about $18,000 for betting on his own appearance at Trump’s State of the Union speech, according to the company.

The penalty against Santos joins a number of other recent moves in the industry to address abuse on the trading platforms, including a regulator’s action against a former White House employee and a campaign reportedly underway at Polymarket to curb bad actors in midterm election betting.

«Santos placed a series of large trades in a market where the underlying contracts depended upon his own attendance at the event,» Kalshi wrote in the disciplinary record posted on its site, which detailed the trading on whether Santos would attend President Donald Trump’s speech earlier this year. «He then began making a series of public statements regarding his attendance at the event in an attempt to influence the price of Yes and No contracts, respectively. Some of these included false or misleading statements.»

He didn’t attend, which is the conclusion he ultimately put money on. Besides the ban, Kalshi also fined him more than $70,000 in its action late last week, and federal authorities have reportedly been looking into it. Santos didn’t immediately respond to CoinDesk’s attempt to reach him for comment.

Santos had received a rare ejection from Congress in 2023 as criminal investigations hounded the disgraced lawmaker. He was serving prison time for fraud when Trump commuted the sentence last year.

Kalshi said Santos’ was among five new enforcement cases at the company, which is responsible under its regulations to act as a first line of defense against manipulation, and the rest received temporary bans after cooperating with their investigations.

«Mr. Santos faces additional financial penalties and will be banned permanently from trading on Kalshi given his lack of cooperation,» a spokesperson said in a statement.

Even closer to Trump, the U.S. Commodity Futures Trading Commission that regulates the industry has also fined a former White House aide for illicit trading late on Friday. Gabriel Perez was ordered to pay more than $170,000 and subjected to a three-year trading ban, and his penalties were noted as having been reduced after his «exemplary cooperation.»

Perez had worked as a teleprompter operator in the White House, and he’d placed bets on «mention» contracts involving Trump at the Kalshi platform. Such contracts pay out when certain words are mentioned by prominent figures during public addresses.

Meanwhile, rival prediction market Polymarket says it has systems in place to detect suspicious trading as the U.S. midterm elections put the prediction market industry’s controls under greater scrutiny.

Shana Bautista, the company’s global head of investigations and intelligence, said in an interview with Reuters that Polymarket uses machine learning, blockchain analytics, trade surveillance and open-source research to identify unusual activity.

Polymarket has referred more than 100 cases to authorities, including bets tied to a U.S. soldier accused of using classified information to wager on the capture of Venezuela’s Nicolas Maduro and possible insider trading ahead of U.S. military action in Iran.

Polymarket also said its systems block the vast majority of U.S. users from its international platform, as required under a 2022 settlement with the CFTC.

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