USA – NEW YORK Trends and Developments Contributed by: Temidayo Aganga-Williams, Selendy Gay PLLC
cial Forces master sergeant, arising from an alleged scheme in which Van Dyke used classified informa - tion regarding a military operation to capture Nico - lás Maduro to place trades on Polymarket. Between 27 December 2025 and 26 January 2026, Van Dyke placed approximately 13 bets totalling approxi - mately USD33,034 on Venezuela- and Maduro-relat - ed contracts and realised gains of approximately USD409,881 following the public announcement of Maduro’s capture on 3 January 2026. This is the first insider trading case involving prediction markets. The CFTC filed a parallel civil enforcement action the same day as the DOJ’s unsealing. The lasting legal significance of the case lies not in its facts but in the statutory architecture SDNY chose. The indictment charges Van Dyke with three counts of violating the Commodity Exchange Act (“CEA”), one count of wire fraud and one count of making an unlawful monetary transaction. The second CEA count invokes the so-called “Eddie Murphy Rule,” enacted as part of the Dodd–Frank Act and codified as Section 4c(a)(4) of the CEA in 2010. The rule prohibits govern - ment employees from using confidential government information to trade futures, options or swaps. This marked the first time this rule was invoked. The third count charges commodities fraud under a misappropriation theory directly analogous to the theory used in traditional securities insider trading cases: the defendant owed a duty of confidentiality to the source of the information, breached that duty and profited from the breach. The misappropriation theory, as charged, applies to any person who trades a prediction market contract on the basis of material nonpublic information in breach of a duty owed to the source of that information, encompassing poten - tially corporate executives, lawyers, compliance offic - ers and employees at any organisation that handles sensitive information under nondisclosure obligations. SDNY’s choice of this theory was deliberate; the office was signalling the framework it intends to apply to the prediction market space broadly. Prediction markets can no longer claim the shelter of regulatory ambiguity. The prosecution of Van Dyke makes plain that USAO-SDNY prosecutors view event contracts as firmly within the reach of federal law and
that anyone who exploits confidential information to trade on these platforms does so at serious legal peril. The charging approach in Van Dyke is notably expan - sive. Rather than defaulting to conventional securities fraud theories, prosecutors assembled a multi-statute case that demonstrates just how wide the net can be cast, extending liability far beyond the financial industry to encompass anyone bound by a duty of confidentiality, regardless of profession. NYDFS and NYAG: Creating a Crypto Enforcement Ecosystem The BitLicense was introduced by the New York State Department of Financial Services (“NYDFS”) in 2015 and widely criticised at the time as regulatory over - reach. It has become one of the most consequential cryptocurrency regulatory frameworks in the world. Not because of its statutory reach, but because of what it requires in practice: capital standards, custody rules, anti-money laundering controls and approval requirements for token listings. Any global crypto firm seeking direct access to the New York market must either meet those standards or formally exclude New York users. The latter choice is itself a business and compliance decision with material consequences and one that an increasing number of firms have made. That enforcement power has been on prominent dis - play in recent years. Between 2023 and 2025, NYDFS secured major enforcement actions against several large crypto firms operating within its regulatory perimeter, which include: • a USD100 million settlement with Coinbase for systemic anti-money laundering and transaction monitoring deficiencies, which also required the installation of an independent monitor; • a consent order with Genesis Global Trading result - ing in its exit from New York and the surrender of its BitLicense; and • a USD37 million settlement with Gemini Trust Company for compliance failures related to its Earn programme, associated with more than USD1.1 billion in customer recoveries through the Earn programme resolution process. NYDFS also brought a significant action against Pax - os Trust Company, beginning with a 2023 order requir -
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