James Comer, the Chairman of the House Oversight Committee, has broadened an investigation into potential insider trading activities within prediction markets. Letters demanding the disclosure of internal data have been sent to Crypto.com, Hyperliquid, and PredictIt.
The legislator has requested these platforms to reveal their user identification processes and algorithms for detecting suspicious activities. Additionally, they must provide a record of all communications with regulators and law enforcement over the past two and a half years.
Specific demands vary for each company. For Crypto.com, the committee is seeking information on whether employees traded contracts based on non-public data regarding token listings or custodial services. Reports concerning potential bets made by officials on regulatory decisions are also requested.
Hyperliquid has been asked about a substantial short position taken by a trader in October, just before the US announced new tariffs. The committee is examining how the platform identifies account owners and reports suspicious transactions to authorities.
Regarding PredictIt, the inquiry focuses on transactions involving current and former officials, particularly bets related to election outcomes, appointments, and government initiatives.
Comer expressed concerns that as the industry expands, unscrupulous traders are profiting from confidential information. The aim of the investigation is to gauge the scale of the issue and draft legislation to prohibit government employees from placing bets on prediction markets.
The investigation commenced in May, with similar requests directed at sector leaders Kalshi and Polymarket. Since then, company representatives have submitted approximately 1,000 documents and participated in several closed-door meetings with the committee.
It is worth noting that in August, the New York City Council initiated a separate review of Polymarket and Kalshi's marketing strategies, focusing on their advertising to youth, influencer payments, and instances of staged videos simulating profitable trades.
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