""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."
Concerns about prediction-market insider trading intensified after a $400,000 payout on Polymarket tied to the arrest of Venezuelan President Nicolas Maduro. Kalshi bans insider trading and warns that insider information erodes trust, dries up liquidity, collapses volume, and can incentivize leaks. Kalshi uses an in-house market surveillance system named Poirot, modeled on systems at the NYSE and Nasdaq, that applies pattern-recognition models to detect suspicious patterns and routes anomalies to an internal market regulation team. Penalties are applied when appropriate and cases may be referred to the CFTC or the DOJ for prosecution. Kalshi will add compliance and forensic experts starting February 5, including Daniel Taylor, Robert DeNault, and a former Under Secretary of the Treasury.
Read at ReadWrite
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