Allegations of insider trading over prediction-market bets tied to Iran conflict
Source: Hacker News
Background
With global markets closed, investors turned to prediction markets and crypto‑based decentralized exchanges such as Hyperliquid to hedge risk or speculate on the outcome and market impact of U.S. and Israeli strikes on Iran. The attacks continued on Sunday, and Iran retaliated against U.S. assets and allies in the region.
Allegations of Insider Trading
Social‑media users on X raised claims that insiders used prediction markets to profit from advanced knowledge of the strikes. Similar accusations had followed a U.S. strike on Venezuela that led to the capture of Nicolás Maduro.
Connecticut Senator Chris Murphy posted:
“It’s insane this is legal. People around Trump are profiting off war and death. I’m introducing legislation ASAP to ban this.”
Murphy also shared a post from Democratic Representative Mike Levin showing that a Polymarket account named “Magamyman” made $515,000 in a single day betting that the U.S. would strike Iran.
Arizona Senator Ruben Gallego added:
“Insider trading in broad daylight. This should be illegal no question. Pricks like this are cashing in on our service members dying. Disgusting and immoral.”
The U.S. military reported that three service members had been killed in action since the strikes began, with five more seriously wounded.
Political Reactions
- Sen. Chris Murphy (CT) – Called for legislation to ban insider trading on war‑related prediction markets.
- Rep. Mike Levin (D‑CA) – Highlighted the large profit made by a Polymarket user.
- Sen. Ruben Gallego (AZ) – Condemned the activity as immoral and illegal.
Regulatory and Legal Context
Prosecutions for insider betting on international conflicts have begun in some jurisdictions. Earlier this month, Israel arrested army reservists for using sensitive information to place bets on strikes against Iran.
Kalshi, a regulated CFTC platform, states that it does not permit bets on wars or assassinations. Nevertheless, a market on whether Iran’s Supreme Leader Ayatollah Ali Khamenei would soon be “out” was widely interpreted as a proxy for an assassination market.
Amanda Fischer, former chief of staff at the SEC, commented on X:
“So this is more or less offering a proxy market on assassination.”
Kalshi Controversy
Kalshi faced criticism for promoting and handling the market tied to Khamenei’s fate. After the U.S. and Israeli strikes, Iranian state media confirmed Khamenei’s death on Saturday.
Kalshi’s CEO Tarek Mansour responded on X, stating that:
- All fees would be refunded to users who participated in the market.
- Positions held before the leader’s death would be cashed out at the last‑traded price.
Some users expressed frustration on X, feeling cheated by the platform’s decision.
Platform Responses
- Kalshi – Provided fee refunds and a cash‑out mechanism for affected positions; no further comment was given to MarketWatch.
- Polymarket – Did not respond to inquiries. The platform maintains a data partnership with Dow Jones, the publisher of MarketWatch.
This article was originally published by MarketWatch, a Dow Jones & Co. property.