A U.S. Army master sergeant stationed at Fort Bragg has been arrested for using classified details about a covert military operation against Venezuelan leader Nicolás Maduro to place lucrative bets on a prediction market, federal prosecutors announced Thursday.
Gannon Ken Van Dyke, 38, of Fayetteville, North Carolina, allegedly participated directly in planning and executing the January 3 raid, then weaponized that inside knowledge to trade on Polymarket, a cryptocurrency-based betting platform. The active-duty soldier turned roughly $33,000 in initial wagers into nearly $410,000 in profits before moving most of the money through a foreign crypto vault into a freshly created brokerage account.
The Justice Department charged Van Dyke with wire fraud carrying up to 20 years in prison, unlawful monetary transaction with a 10-year maximum, and three counts of violating the Commodity Exchange Act, each punishable by up to a decade behind bars. Prosecutors unsealed the indictment in Manhattan's federal court.
"The defendant allegedly violated the trust placed in him by the United States Government by using classified information about a sensitive military operation to place bets on the timing and outcome of that very operation, all to turn a profit," said U.S. Attorney Jay Clayton for the Southern District of New York. "That is clear insider trading and is illegal under federal law."
The case marks the first time the Commodity Futures Trading Commission has pursued insider trading charges tied to event contracts, signaling fresh regulatory muscle as lawmakers and federal agencies tighten oversight of prediction markets. Van Dyke had signed nondisclosure agreements pledging never to divulge classified or sensitive military information.
Polymarket disclosed that it had referred the user to the Justice Department after identifying trades based on classified government intel. The platform said it recently published enhanced market integrity rules to combat insider trading. "Insider trading has no place on Polymarket," the company stated on social media. "Today's arrest is proof the system works."
Prosecutors invoked the "Eddie Murphy Rule," a provision of the 2010 Dodd-Frank Act formally known as Section 746, which prohibits trading commodities using stolen or misappropriated nonpublic government information. The rule takes its nickname from the 1983 film "Trading Places." This is the first time the CFTC has deployed it in an insider trading case.
Author James Rodriguez: "This bust exposes the dark side of prediction markets and why regulators finally woke up to the threat."
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