On Friday, the Commodity Futures Trading Commission (CFTC) announced it had reached a deal with White House teleprompter operator Gabriel Perez, who abused privileged access to nonpublic information to profit more than $107,500 on Kalshi’s “mention” markets.
“Under the order, Perez must disgorge the profits he made from his unlawful trading totaling $107,539.02 and pay a civil monetary penalty of $65,000, representing a substantial discount under the Division of Enforcement’s new cooperation advisory because of Perez’s exemplary cooperation with the CFTC,” states the official press release published on August 28th. “Perez agreed to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. Under the order, a three-year trading ban is imposed on Perez.”
Mention markets refer to event contracts traded on exchanges that revolve around what an individual or media representative might say during the course of a specific event or time period. Trading activity on sports-based mention markets has recently been suspended on Kalshi, but political and global affairs mention markets remain active.
Earlier this month, the CFTC Innovation Advisory Committee expressed concern over mention and appearance markets due to their susceptibility to market manipulation and insider trading. The CFTC order relayed on Friday says that Perez used his nonpublic knowledge to make successful trades on which “words or phrases” President Donald Trump used during a specific public announcement.
“In his position, Perez had access to presidential speeches prior to those speeches being delivered and Perez misappropriated that information…,” reads the CFTC order.
According to a social media post uploaded on Friday by Kalshi head of enforcement Robert J. DeNault, “A Kalshi surveillance investigation caught a White House staffer engaging in prohibited trading activity. Today this individual was subjected to penalties by the CFTC and by our exchange.”
DeNault ended his post with a warning to insider traders who hold accounts on the CFTC-regulated platform. “It doesn’t matter who you are: violate our rules or federal law and you will face the consequences.”
Perez’s “exemplary cooperation” with the federal agency may mean that he avoids criminal prosecution, unlike other high-profile individuals who have allegedly used privileged information to profit from prediction market trades have not escaped.
In April of this year, federal authorities criminally charged US Army Special Forces soldier Gannon Ken Van Dyke. According to prosecutors, Van Dyke used classified intel to profit more than $409,000 from prediction markets related to US military action in Venezuela by using a VPN to access Polymarket’s international exchange. One month later, a former Google employee was charged by the DOJ for allegedly making $1.2 million in illegal gains on Polymarket trades linked to Google Trends outcomes.
The insider trading accusations against White House teleprompter operator Gabriel Perez, now confirmed through the CFTC settlement, show that market manipulation concerns are merited for both prediction trades (offered by exchanges) and prop bets (offered by sportsbooks) that are uniquely vulnerable to being swayed or compromised by a lone individual.
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