Original article by Odaily Odaily( @OdailyChina )
Author｜Golem ( @web3_golem )
Not long after, when facing a jury, Sergeant Major Gannon Ken Van Dyke will surely recall the moment he stood on the deck of the USS Iwo Jima waiting for the sunrise.
On the evening of January 2, 2026, Trump ordered a U.S. military raid on Venezuela to capture Maduro and his wife. The mission ended in the early hours of January 3, and Maduro and his wife were taken to the USS Iwo Jima for transport to the United States. Hours later, 38-year-old Sergeant Van Dyke, holding a rifle, stood on the deck with three other soldiers for a photo and shared it on social media. The atmosphere was relaxed, but he could not share his joy with anyone.
Because he was a leaker, an insider who made huge profits using insider information on Polymarket. Days before the US military operation, Van Dyke placed a series of bets on Polymarket, including whether Maduro would step down before January 31, 2026, and whether the US military would attack Venezuela before January 31, 2026. Van Dyke bet a total of $33,933, ultimately profiting over $409,000, a return of over 1200% .
Canon Ken Van Dyke
Van Dijk was not the only one to profit from insider information during the arrest. According to Odaily Seer , three addresses on Polymarket placed bets on his removal from office before the Venezuelan president's arrest, accumulating a total profit of $630,400. Specifically, address 0x31a5 (0x31a5...8eD9) invested $34,000 and profited $409,000; address 0xa72D (0xa72D...eBd4) invested $5,800 and profited $75,000; and address SBet365 invested $25,000 and profited $145,600.
At the time, there was much speculation in the market about the identities of these insider addresses, but it was unknown which address, which generated the most profit, actually belonged to Van Dyke.
To be on the safe side, after seeing reports of insider trading related to the assignment, Van Dyke also deleted his Polymarket account and changed the email address registered to crypto exchage account in an attempt to cover up evidence of the transactions.
Nevertheless, after a nearly four-month joint investigation by Polymarket and the U.S. Department of Justice, Van Dyke was apprehended .
On April 23, the U.S. Department of Justice announced the arrest of John Van Dyke, who is charged with crimes including illegally using classified government information for personal gain, stealing non-public government information, merchandise fraud, wire fraud, and engaging in illegal currency transactions. The Department of Justice stated that Van Dyke is expected to appear in court later in North Carolina; information regarding his defense attorney has not yet been released.
This is the first time that U.S. authorities have arrested insiders who used classified information to place bets in the prediction market, and the final trial outcome may have a profound impact on the large amount of insider trading that exists in the prediction market in the future.
But prior to this, Polymarket's new enhanced market integrity rules had already made it impossible for insiders to remain uneasy.
Polymarket Enhanced Market Integrity Rules
On March 23, Polymarket released enhanced market integrity rules and incorporated them into its terms of use. The new rules explicitly prohibit insider trading and any trading by individuals who may influence the outcome on Polymarket, specifically the following three types of behavior:
- Using stolen confidential information for transactions: If a user possesses confidential information about the outcome or possible outcome of an event, and using such information would violate any existing trust or confidentiality obligations to another person or entity, that user shall not engage in any contractual transactions.
- Trading with unlawful inside information is prohibited: If a user knows or has reason to know that the person providing the information is himself prohibited from trading with that information, then the user must not trade with confidential information obtained from a person who has an existing trust or confidentiality obligation.
- Transactions must not be conducted in a manner that could influence the outcome: If a user possesses power or influence sufficient to affect the outcome of the subject event, that user must not engage in any contractual transactions; nor may the user trade in accordance with the instructions of persons possessing such power or influence.
To help users better understand what constitutes insider trading, Polymarket provides specific examples in its market integrity rules on its main site and US site . For instance, military personnel cannot bet on upcoming military operations, political election candidates cannot personally or encourage anyone to bet on their election results, and company CEOs cannot personally or encourage anyone to bet on "mentioned markets" involving themselves.
To effectively combat insider trading like the aforementioned, Polymarket has established a multi-layered monitoring system. When Polymarket or the community (Note from Odaily: any user can now report suspected insider trading activities) detects suspicious trading activity, Polymarket will initiate an investigation and, if necessary, take disciplinary action, ban wallet addresses, file legal proceedings, or refer the matter to law enforcement.
Before Van Dyke's arrest, insiders might have thought that Polymarket's market integrity rules were just bluffing, because on a platform without KYC and settled in cryptocurrency, it would be extremely difficult to trace the on-chain addresses and find the insiders hiding behind the screen, and Polymarket would not be willing to do such a thing.
However, this idea is extremely naive. First, current regulations and on-chain tracking technology are already very sophisticated and powerful. Users may not need to conduct KYC on Polymarket, but they will certainly do so through exchanges and other deposit and withdrawal channels. Except for top-tier hackers, ordinary users have virtually nowhere to hide from such investigations. Second, in order to gain the support of US regulators, Polymarket will actively cooperate with law enforcement agencies in investigating insider trading. For typical insider cases like Van Dyke's, they will spare no effort, even at the cost of manpower and resources.
At this point in the analysis, if you are someone who has inside information about certain minor events, you might still be clinging to the hope that you are not like Van Dyke, who engaged in insider trading on such high-profile events, or that you are not a U.S. citizen, so U.S. regulators or Polymarket can't do anything to you.
Polymarket and regulators certainly can't treat every insider trading case the same way they treated Van Dyke. For insider trading with small profits and limited impact, identifying the insiders or pursuing legal action seems like overkill. But Polymarket has a killer move for dealing with these insider trading cases—blocking addresses. This is the rule that all insiders and users should truly fear, and it's even shaking Polymarket's core narrative.
cost
On April 23, prediction market Kalshi disclosed that it had fined three congressional candidates who bet on their own election results and banned them from the platform for five years. Do you think they made a lot of money from this? In fact, the fines for the three candidates totaled less than $8,000, and one of them had only bet $100.
The ability to handle insider trading so quickly is thanks to Kalshi's KYC and compliance system, which it has built since its inception. However, insider trading involving small amounts and low impacts like this might not even be noticed, let alone dealt with, if it were placed on Polymarket.
This isn't because Polymarket is subjectively condoning insider trading, but rather because Polymarket itself faces significant self-regulation challenges . Its lack of KYC, low account creation threshold, and on-chain anonymity make it difficult for Polymarket to manage and vet users like Kalshi does. This creates fertile ground for insider trading. When the economic incentives for insider trading are high enough and the risks are low enough, human nature cannot withstand the test.
Odaily previously analyzed that insider trading is a double-edged sword for Polymarket when insiders used it to profit illegally from the Maduro arrest operation (related reading: When war is settled before news: How the prediction market "priced" the Maduro arrest operation 6 days in advance ) .
On the one hand, insider trading often means releasing information before mainstream media, which brings Polymarket trading volume and information disclosure speed that surpasses the media. Pre-pricing and predicting event outcomes have gradually become Polymarket's core narrative. On the other hand, insider trading also means information leaks in advance, which stakeholders will naturally resist. Especially when regulators believe that insider trading has threatened traditional information security, Polymarket will have to choose between its own security and the advantages brought by insider trading.
Judging from the results, the introduction of the enhanced market integrity rules has already demonstrated Polymarket's stance, but the cost is that users' trust in the platform may be lost.
Banning user addresses is inherently a sensitive issue for a decentralized platform, as misuse or accidental blocking can trigger user resentment and concerns about fund security. Polymarket's core competitive advantage has always been enabling people worldwide to participate in prediction markets and guaranteeing free deposits and withdrawals . However, if Polymarket grants itself the power to ban suspicious user accounts, not only will insiders be hesitant to trade on the platform, but legitimate users who are profiting will also worry that the platform might use this as an excuse to prevent withdrawals. Once the door to banning accounts is opened, it may never be closed again.
In conclusion, while a crackdown on insider trading may ensure Polymarket's regulatory security, it will inevitably weaken its foresight and accuracy in predicting event outcomes, and also increase users' concerns about the safety of their funds. Ultimately, a mature Polymarket will become a mediocre adult.
