George Santos Agrees to $35,000 To Settle Federal Probe Over Kalshi Trades

A former congressman, George Santos, has agreed to pay more than $35,000 to settle a federal investigation into his trading on prediction market platform Kalshi, after regulators found he profited from trades tied to his own attendance at President Trump’s State of the Union address in February.The Commodity Futures Trading Commission announced Friday that Mr. Santos will pay a $17,500 civil monetary penalty and forfeit an additional $17,570 in profits — the amount he earned from the trades. He will also be banned from trading on Kalshi for three years.The case centers on trades Mr. Santos placed on whether he would attend Mr. Trump’s February address to Congress. In the days leading up to the speech, Mr. Santos publicly indicated he planned to be in the crowd. “I’m going to be there for the State of the Union in the gallery, guys,” Mr. Santos wrote on X the day before the address. Yet he had simultaneously placed trades predicting he would not appear — and minutes into the speech, posted that he had been waylaid at the airport.Social media users were quick to call him out. At the time, Kalshi had set the odds of Mr. Santos attending at close to 75 percent.“After these posts, the SOTU contract prices moved in a direction that was favorable to Santos’ positions which allowed him to make over $17,500,” the CFTC wrote in its announcement.Kalshi flagged the unusual activity and referred the matter to federal authorities. The CFTC opened its investigation in June. Rival prediction platform Polymarket also cut ties with Mr. Santos that same month.Mr. Santos’ attorney, Joseph W. Murray, defended his client’s conduct and characterized the settlement as a pragmatic decision.“Mr. Santos has agreed to resolve the CFTC’s inquiry and to put this matter behind him. Critically, and consistent with how these regulatory matters are commonly resolved, Mr. Santos has settled without admitting any of the Commission’s allegations, findings, or conclusions,” Mr. Murray said in a statement shared by Mr. Santos on X. “He chose a prompt, practical resolution, rather than protracted, costly litigation, and that choice should not be mistaken for admission of any wrongdoing, because it is not one.”The settlement adds to Mr. Santos’ lengthy list of legal troubles. He was expelled from Congress in 2023 and later pleaded guilty to federal wire fraud and identity theft charges related to campaign finance fraud, receiving an 87-month prison sentence. He served less than three months before Mr. Trump granted him clemency last year.Meanwhile, New York Attorney General Letitia James on Friday filed a lawsuit against Kalshi, alleging the company is running an unlicensed gambling operation in the state. The suit seeks a permanent injunction, fines, forfeiture of profits, and restitution to users.“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,” Governor Kathy Hochul said in a statement. “This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”Kalshi pushed back hard. “It’s sad to see this type of political theater from the leadership in our own state. States can’t just shut down a federally licensed exchange,” said Elisabeth Diana, Kalshi’s head of communications.The CFTC agrees. The agency filed an emergency request to block New York’s enforcement action, arguing it holds exclusive jurisdiction over prediction markets. CFTC Chairman Michael Selig called the lawsuit “egregious,” adding via X that New York is attempting to “force an unprecedented sudden shutdown of prediction markets nationwide.”Mr. Selig was appointed to his post by President Trump whose son, Donald Trump Jr., is an adviser to and investor in Kalshi.New York joins Arizona, Michigan, Nevada, and Washington in challenging Kalshi — a legal battle that may ultimately reach the Supreme Court.

George Santos Agrees to $35,000 To Settle Federal Probe Over Kalshi Trades

George Santos Agrees to $35,000 To Settle Federal Probe Over Kalshi Trades

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