Former US congressman settles CFTC market manipulation case for $35,000
George Santos reaches agreement with the derivatives regulator to close the door on investigation into claims he profited from a Kalshi market regarding his appearance at the State of the Union address
Former US congressman George Santos has agreed to pay more than $35,000 to resolve a Commodity Futures Trading Commission (CFTC) action alleging he manipulated a prediction market contract linked to whether he would attend the State of the Union address.
The CTFC said the settlement requires Santos to forfeit the more than $17,000 he allegedly earned through the unlawful trading, pay a $17,500 fine, and serve a three-year trading ban.
His attorney said the settlement was agreed to prevent “costly litigation” and that it was “not an admission of any wrongdoing”.
The CFTC inquiry, which launched in June, came after the US Department of Justice (DOJ) was notified of suspicious activity linked to a Kalshi account.
According to the investigation, Santos used several social media posts to manipulate the price of contracts linked to his attendance of the address to Congress before cashing out his positions on the same Kalshi market.
The case
Santos is alleged to have created a Kalshi account on February, approximately three weeks after the platform first posted a market speculating on his appearance at the event.
Over the 10 days that followed, he funded the account with $7,000 and traded exclusively on that specific market.
During that period, Santos is alleged to have used the funds to purchase ‘Yes’ contracts on his State of the Union attendance.
Santos also posted to the social media platform X asking whether he should ‘wear a muted or serious suit to the SOTU [State of the Union] or a bedazzled one?’
This led to the price of the ‘Yes’ position for his attendance rising from $0.15 to $0.70 per contract.
He would then go on to sell more than 30,000 contracts for a profit of $3,448.43, before withdrawing over $10,000 from his Kalshi account.
Across multiple X posts, Santos detailed potential travel issues that could prevent him from attending the address, while also directly telling one person that he would indeed be able to make it.
After posting a video where he stated “I am going to be there for the State of the Union in the gallery guys”, Santos built an $8,650 position on the ‘No’ side which he cashed out for a $14,390 profit the day after he did not attend the address.
The CFTC alleged Santos “acted willfully or, at the very least, recklessly”, and that he “knowingly made misleading public statements and omissions about his activities in relation to the underlying event to influence the contract price for the benefit of his trading position”.
The defence
A statement released by Santos’ attorney on 31 July, read: “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 with without admitting any of the Commission’s allegations, findings or conclusions.
“He chose a prompt, practical resolution rather than protracted, costly litigation, and that choice should not be mistaken for an admission of any wrongdoing, because it is not one.
The statement continued: “The facts underlying this matter are straightforward. The 2026 State of the Union was the first time Mr. Santos had ever wagered a bet on a “prediction” market of any kind.
“After Mr. Santos’ travel plans were repeatedly frustrated by the widely reported winter-weather disruptions along the East Coast, he realised that he would not be able to safely attend the address and then logically adopted a no position.
“Mr. Santos concealed neither his intention to attend, nor his change of plans to not attend the SOTU, from anyone. There was absolutely no intent to deceive any person, nor intent to manipulate the market.
“The terms speak for themselves. This was a civil, administrative resolution; there are no criminal charges and no finding or admission of liability. The agreed financial terms are modest by any measure of a federal regulatory matter, and Mr. Santos has agreed to a limited, time-defined period concerning trading on registered platforms. He accepts these terms as the sensible price of closure and finality.”
Santos has previously been issued an 87-month prison sentence over wire fraud and aggravated identity theft charges.
He served on the House of Representatives for less than a year before being expelled in 2023.
Concerns over insider trading across prediction market platforms have been repeatedly raised throughout the year.
A member of the US special forces was arrested in April after allegedly betting on the ousting of Venezuela president Nicolás Maduro in the lead-up to the military operation in January.
Trading activity on Polymarket around the time of the US air strikes on Iran in February also sparked fears of insider trading, with six users winning a total of $1.2m on related trades.
Politicians introduced the STOP Corrupt Bets Act in March, designed to ban prediction market bets on elections, sports and military and government actions.