Prediction and digital markets are growing quickly, but a wave of enforcement cases suggests compliance teams may be underestimating the conduct risks building up beneath the surface.

According to StarCompliance, the misuse of material, nonpublic information (MNPI) on these platforms is no longer a theoretical concern. It is already leading to criminal charges, bans and financial penalties.

Recent investigations have put employee conflicts and potential insider activity at the centre of the debate. They raise uncomfortable questions for firms about who is trading, what information they hold and when they obtained it. As the sector expands, organisations that fail to adapt their oversight risk being caught out.

The cases span a wide range of industries. A US Army soldier has been charged with allegedly using classified information to make around $410,000 in prediction market profits, while researchers have separately flagged more than 150 Polymarket wallets for potentially suspicious military-related trades.

In another case, a former White House teleprompter operator was ordered to pay more than $172,000 after trading on advance knowledge of presidential speeches.

Kalshi has also taken action on its own platform. It imposed a two-year ban and a financial penalty on an editor working for MrBeast, who allegedly traded on nonpublic information about upcoming content. The platform also suspended a California political candidate for five years after he placed trades on his own election, highlighting clear conflict of interest concerns.

Digital assets are not immune. Federal prosecutors in the Southern District of New York have charged two Robinhood engineers with commodities and wire fraud.

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