Kalshi CEO explains insider trading prohibitions on the platform

Kalshi CEO Tarek Mansour has outlined the actions the prediction market platform has taken to block insider trading.

CEO and founder Tarek Mansour has taken to X to outline the company’s approach to insider trading, as concern around the potential for such practices on prediction markets abound. Brought into sharper focus by a $400,000 payout on Polymarket based on the arrest of Venezuelan President Nicolas Maduro, experts have been raising the alarm around the potential for prediction market insider trading for months now.

“Some say insider information can make prediction markets more accurate,” wrote Mansour. “But the same argument can be made for stock markets, where insider trading is banned. Insider trading erodes trust. When people believe a market is unfair, they stop trading.

“Liquidity dries up, volume collapses, and the market dies. Also, allowing it could incentivize bad actors to leak information they shouldn’t. So Kalshi bans insider trading.”

He goes on to explain Kalshi uses an in-house market surveillance system, named Poirot, that’s similar to those in use at the NYSE and Nasdaq. It uses pattern recognition models to spot suspicious patterns, sending anomalies to an internal market regulation team for review. Where necessary, penalties are handed out and cases may be referred to the CFTC or the DOJ for further prosecution.

Next steps to stop insider trading

Mansour also announced new plans, starting from February 5, to add new members of the team, including Wharton Forensic Analytics Lab Director Daniel Taylor, criminal attorney Robert DeNault, and former Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson as advisors to help improve the company’s internal systems.

Kalshi has also formed an independent committee of market integrity experts to provide quarterly reports to Brian and publish relevant statistics, and partnered with Solidus Labs to upgrade its systems.

“All industries have bad actors and no system is perfect, Kalshi’s included,” concluded Mansour. “But we are committed to improving daily. Lots of work ahead!”

This builds on comments previously made by Mansour in support of a bill that would ban government officials from using prediction markets.

Featured image: Kalshi

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