White House warns staff against Iran war bets

The White House last month warned its staff against placing bets in futures markets after U.S. President Donald Trump announced a sudden pause of strikes against Iran, The Wall Street Journal reported on Apr. 9.

When Trump announced a pause in hostilities in a Truth Social post on March 23, more than $500 million in crude oil futures trades were made 15 minutes prior to the president making the post.

This prompted the White House Management Office to send a staff-wide email on March 24 and warned them not to use their positions to make well-timed prediction market bets related to the Iran war.

The White House took this action after press reports raised concerns over government officials using non-public information to trade on prediction markets like Polymarket and Kalshi.

Related: Mysterious trader's $400K profit on Maduro’s ouster triggers swift action

Polymarket lets traders place bets with cryptocurrency 

Launched in 2020, the New York City-headquartered Polymarket is a crypto-based prediction market. It lets traders predict events like future Bitcoin prices, election results, government shutdowns, Federal Reserve policy, etc., by paying with cryptocurrency.

Traders can deposit the USDC stablecoin and trade shares that represent the likelihood of specific future outcomes. Recently, Polymarket announced it is going to migrate from USDC to Polymarket USD, a new collateral token backed 1:1 by the USDC.

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Alleged insider trading on prediction markets

When the U.S. abducted Venezuelan president Nicolás Maduro and his wife Cilia Maduro in January this year, a newly created account on Polymarket profited over $400,000 by betting on the event.

When the U.S. and Iran recently agreed to a temporary ceasefire, a group of traders on Polymarket profited more than $600,000 by making the right prediction, the on-chain analytics firm Bubblemaps highlighted.

Such well-timed, precise, and profitable trades on Polymarket led to speculations of insider trading. This has led to several policymakers proposing a ban on insiders making bets.

For instance, Senator Richard Blumenthal (D-CT) last month introduced legislation to ban betting related to war, death, or military action on these prediction markets and enact rules on insider trading.

Similarly, Senators Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) also introduced legislation last month to ban the president, the vice president, and the Congress members from trading event contracts tied to the outcome of specific real-world events.

On March 23, Polymarket and Kalshi both announced that they were tightening rules to address insider trading.

Related: Google Finance to integrate Polymarket and Kalshi prediction data