📊 Insider trading...is it legal now?

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Here’s what we got for you today:

• 🇺🇸 Congress targets prediction markets insider trading

• 👻 Phantom launches native Kalshi support

• 💰 Domain experts win big in new markets

• 📈 Market Moves

• 📊 Odds & Ends

Last week, a new Polymarket account bet $32,500 that the U.S. would invade Venezuela and force Maduro out by January 31st.

The odds? Just 6%.

By Saturday morning, hours after Trump announced U.S. forces captured Maduro, that position was worth $436,759. A 1,200% return in less than a week.

This wasn't the only account. Blockchain analyst Lookonchain found three wallets that placed Venezuela bets just hours before Maduro's arrest. All created days in advance. All betting exclusively on Venezuela. Combined profit: $630,484.

This is only possible because Polymarket operates on the blockchain. Thus, anyone with insider info and a VPN can create a crypto wallet and bet without ID verification or geographic restrictions.

Obviously, such a story went viral on X and got picked up by mainstream outlets like Axios and the Wall Street Journal, catching the attention of Congress. So much so that Rep. Ritchie Torres is introducing the Public Integrity in Financial Prediction Markets Act of 2026 to ban insider trading on prediction platforms.

The bill would bar federal officials, appointees, and executive branch employees from trading on government policy when they possess material nonpublic information. No co-sponsors yet. Torres is hoping to build support in the coming weeks.

Here's the reality, however: Torres' bill won't stop this. Semi-anonymous crypto wallets + VPN access + global traders outside U.S. jurisdiction = a regulatory nightmare for agencies like the CFTC. How do you prove someone had insider information when you can't even prove who they are?

Welcome to prediction markets.

PHANTOM HAS ENTERED THE CHAT 👻

Phantom, the Solana blockchain wallet with over 15 million monthly users, just dropped native prediction markets powered by Kalshi.

What does this mean? You can now bet on sports, politics, anything in the same app where you store your crypto. No switching platforms or needing separate logins. Just open your wallet and bet, or “predict.”

Here's the interesting part: every market has a live group chat. Elon could literally sit in the "How many times will Elon tweet today" market watching people bet on him in real-time. Traders arguing about his posting schedule while he's right there. That's either the future of social betting or absolute chaos. Probably both.

What makes this interesting, however, isn't the mechanics. It's the distribution. Phantom has millions of users who already have funded wallets and already understand market mechanics. Now, they can bet on the Super Bowl in the same place they swap tokens. Phantom is hoping that trading on outcomes becomes as natural as scrolling a feed. But what does this mean for Kalshi as they expand their partnerships?

I see two paths. In the first, Kalshi and Polymarket surrender distribution to bigger players and become foundational infrastructure for the prediction market ecosystem. The question then: what stops these bigger players from eventually building their own infrastructure? Is being the liquidity layer enough? In the second, Kalshi and Polymarket own distribution themselves, but if that's the goal, every partnership chips away at it.

I'm not sure what the long-term play is here, but either route looks rocky for the current market leaders.

EXPERTISE HAS A NEW ASSET CLASS💰

Luana Lopes Lara, Kalshi’s co-founder and the world’s youngest self-made female billionaire, went on Fox Business yesterday to discuss the company’s future. She explained how she and Tarek Mansour, Kalshi's other co-founder, initially pitched Kalshi seven years ago as a way to give people the tools to predict the future.

Lopes emphasized that some of Kalshi’s top users are leveraging deep domain knowledge to make life-changing money, enough to pay bills, eliminate student debt, and more.

"Everyone is an expert on something," Lopes said, pointing to a user who made $70,000 trading exclusively on Ariana Grande markets. Their edge came from years of being a dedicated superfan. That same user later quote-tweeted her interview on X, thanking Lopes for changing their life.

The broader point Lopes is making is that Kalshi can serve as a vehicle for anyone with true expertise to trade on the future of their domain and potentially get rich doing so.

I largely agree with Lopes. It’s also why I’m confident that prediction markets will revolutionize how markets aggregate and capture information from all kinds of events: cultural, political, artistic, and beyond. That said, after watching a Polymarket trader create an account the night before Maduro's capture, bet $30,000, and walk away with more than $400,000, I had to ask: where's the line between "expert knowledge" and insider information?

In traditional financial markets, the SEC draws clear boundaries around insider trading. Employees with privileged information are restricted from trading, suspicious activity is monitored, and violations can lead to serious prison sentences. Prediction markets don’t yet have comparable infrastructure or regulatory clarity, leaving much of the space effectively unregulated.

As we head into 2026, it remains to be seen where the CFTC and Congress will draw the line, what will qualify as legal trading, and how these markets will be policed. Until then, let the players play.

MARKET MOVES 📈

ODDS & ENDS 📊

• Football.fun becomes the 5th highest revenue generating protocol on Base, Coinbase’s blockchain, over the last 30 days.

• Bloomberg covers the infamous “Will Jesus return in 2025” Polymarket as prediction markets continue to go mainstream.

• Tensions rise in Israel-Iran conflict, odds of strike increase.

MEME OF THE DAY 😂