News: Kalshi Announces Expanded Efforts To Combat Insider Trading
The prediction market launches a surveillance advisory committee and hires a head of enforcement.
Kalshi announced “a major expansion of its market surveillance and enforcement framework” designed to combat insider trading on Thursday.
The centerpiece of the efforts:
A new surveillance advisory committee
Partnerships with Solidus Labs and the Director of the Wharton Forensic Analytics Lab, Daniel Taylor, to aid in surveillance
The hiring of a head of enforcement
One of the flashpoints and debates in prediction markets in recent months has been insider trading — particularly in the wake of markets about US military action in Venezuela. Is insider trading good because it helps markets get closer to “the truth”? Or is it something that needs to be stopped?
Kalshi is clearly putting all its chips on the latter. CEO Tarek Mansour had this to say on Twitter after the news:
“Insider trading erodes trust. When people believe a market is unfair, they stop trading. Liquidity dries up, volume collapses, and the market dies. Also, allowing it could incentivize bad actors to leak information they shouldn’t.”
Mansour noted that Kalshi has conducted over 200 investigations in the past year and froze some relevant accounts as a result. Those investigations have turned into a dozen active cases, some of which have been referred to law enforcement, according to Mansour.
Here’s what we learned from Kalshi’s press release, which notes the company had previously “spent years building custom prediction market trade surveillance and enforcement systems that are similar to those used in the stock market”:
The engagement of former Under Secretary of the Treasury for Terrorism and Financial Intelligence and Cooley partner, Brian Nelson, to advise Kalshi on market integrity, trading surveillance, and financial compliance matters. Kalshi has also formed an independent Surveillance Advisory Committee, whose members include Lisa Pinheiro, Managing Principal at Analysis Group, where she leads work on data-driven analysis of market manipulation and price impact, and Daniel Taylor, Director of the Wharton Forensic Analytics Lab and insider trading and fraud prediction expert. The Committee will provide quarterly analysis to Kalshi’s outside counsel, and it will publish a series of statistics related to flagged trades, investigations opened and closed, and any disciplinary proceedings initiated by the exchange.
Partnership with Solidus Labs. Solidus Labs provides trade surveillance technology to detect, investigate, and address market abuse. Kalshi will use the Solidus platform to augment its in-house systems and provide institutional-grade protection against sophisticated manipulation across its 4,000+ markets. Solidus’ work with Kalshi will be in collaboration with Daniel Taylor, Director of Wharton Forensic Analytics Lab.
The appointment of Kalshi lawyer Robert DeNault to the role of Head of Enforcement. In his new role, Robert will coordinate with the Surveillance Advisory Committee and Kalshi’s surveillance partners, as well as Kalshi’s Compliance Department, to prevent and detect instances of insider trading and market manipulation. DeNault joined Kalshi at the end of 2025 after working as an attorney in the global white collar crime practice group at White & Case LLP. There, he advised clients on financial and securities fraud investigations, regulatory and enforcement matters, and internal investigations.
There has been a lot of chatter about how effectively Kalshi and others could monitor thousands of markets across sports, politics, finance, and beyond. The announcements Thursday are clearly meant to at least start assuaging those concerns.
More from Mansour on Twitter, providing insight into current surveillance efforts:
Just like stock markets. We spent years building a market surveillance system similar to those used by the NYSE and Nasdaq:
1. Detect: Our surveillance system (called Poirot, after the French detective) flags suspicious patterns in real-time by running trades through pattern recognition models. Insider trades stand out because they often are weird and are bigger in size: people don’t usually commit fraud for $25.
2. Investigate: We have a market regulation team that conducts investigations. They review KYC data, funding sources, prior trading history, and trade rationale. They contact traders when needed.
3. Enforce: If we find wrongdoing, penalties range from warnings and fines, to referrals to the CFTC (and sometimes DOJ) for civil/criminal prosecution.
Transparency helps.
All activity on Kalshi is public. We also report it to the CFTC daily. Because of that, our traders help by sending us whistleblower tips. To those traders, I know some of you are frustrated that we don't tell you what happens after you send a tip. I get the frustration. Legally, we need to keep our investigations private – but please know your help is super valuable.
Kalshi has also been supportive of federal legislation that would make insider trading on prediction markets illegal.