US soldier charged with insider trading on Polymarket

An active-duty U.S. Army soldier has been charged with insider trading after prosecutors say he used nonpublic information that Nicolás Maduro had been captured to buy contracts on Polymarket, a blockchain-based prediction market, before the news was public.

Charging documents allege the soldier received the tip, bought positions that would pay out if the capture was reported, and later withdrew proceeds after the contracts resolved in his favor. Prosecutors say the trades were placed prior to public reporting of the event and that the timing and account activity provide the basis for criminal charges.

Investigators traced blockchain transactions and communications that they say linked the trades to the defendant. The complaint outlines deposits into the account, purchases of prediction contracts, and transfers of eventual payouts out of the account tied to the soldier. Authorities also sought to determine whether any intermediary relayed the tip and whether other parties traded on the same information.

The charges assert the defendant traded on material, nonpublic information. Polymarket and similar platforms let users buy and sell contracts tied to real-world outcomes. Because many prediction markets use distributed ledger technology, transaction records are publicly accessible and can be analyzed during an inquiry.

Legal questions have arisen about how traditional insider trading law applies to decentralized and crypto-based markets, where contracts may be structured differently from conventional securities. Prosecutors have in other cases pursued allegations of fraud and market manipulation involving online platforms that facilitate speculative wagers about real-world events.

The soldier is scheduled for an initial court appearance, where a judge will consider bail and next steps in the prosecution. If convicted, penalties could include imprisonment, fines, and forfeiture of alleged illicit gains, depending on the charges and the outcome of a trial.

Authorities say they reviewed ledger records and communications to develop the case and are examining whether the information originated inside military or other official channels.