Original ｜Odaily Planet Daily （@OdailyChina）

Author ｜Golem （@web3_golem）

Shortly after, facing the jury, Sergeant Major Gannon Ken Van Dyke would 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 the U.S. military to raid Venezuela and capture the Maduro couple. The mission concluded in the early hours of January 3, and the Maduro couple was brought aboard the USS Iwo Jima to be transported to the United States. Hours later, 38-year-old Sergeant Van Dyke, holding a rifle, took a photo with three other soldiers on the deck and shared it on social media. The atmosphere at that moment was relaxed, but the joy in his heart could not be shared with anyone.

Because he was a leaker, an insider who profited handsomely using inside information on Polymarket. In the days leading up to the U.S. military operation, Van Dyke placed a series of bets on Polymarket, including whether Maduro would step down before January 31, 2026, and whether the U.S. military would attack Venezuela before January 31, 2026, with a total stake of $33,933, ultimately profiting over $409,000, yielding over 1200%.

Gannon Ken Van Dyke

Van Dyke was not the only one profiting from insider information during this capture operation. According to monitoring by Odaily Seer Prophet Channel, before the capture of the Venezuelan president, three addresses on Polymarket had already placed bets on his departure, cumulatively profiting $630,400. Among them, address 0x31a5 (0x31a5...8eD9) invested $34,000 and profited $409,000; address 0xa72D (0xa72D...eBd4) invested $5,800 and profited $75,000; address SBet365 invested $25,000 and profited $145,600.

At that time, there were many speculations in the market about the identity of these insider addresses, but nobody knew that the address with the most significant profit actually belonged to Van Dyke.

To be safe, after seeing reports about insider trading related to the mission, Van Dyke deleted his Polymarket account and changed the email address registered with the cryptocurrency exchange account in an attempt to conceal evidence of the trades.

Nevertheless, after nearly four months of 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 that Van Dyke had been arrested, facing charges including illegally using government confidential information for personal gain, stealing non-public government information, commodity fraud, telecommunications fraud, and conducting illegal currency transactions. The Department of Justice stated that Van Dyke is expected to appear in court later in North Carolina, and his attorney's information has not yet been disclosed.

This is the first time U.S. authorities have carried out a arrest operation against insiders using confidential information to bet on prediction markets, and the final judgment may have a profound impact on the numerous insider trading activities in future prediction markets.

But beforehand, in fact, Polymarket's newly released enhanced market integrity rules had already made it difficult for insiders to remain comfortable.

Polymarket Enhanced Market Integrity Rules

On March 23, Polymarket released enhanced market integrity rules and incorporated them into its user terms. The new rules clearly stipulate that insider trading and any trades made by persons who may influence results are strictly prohibited on Polymarket, specifically including the following three behaviors:

• Trading using stolen confidential information: If a user possesses confidential information about the outcome or possible outcomes of a target event and using that information would violate existing trust or confidentiality obligations to others or entities, then that user must not engage in any contract trading;
• Not allowed to trade using illegal insider information: If a user knows or has reason to know that the person providing that information is themselves prohibited from trading based on that information, then that user must not trade using confidential information obtained from persons with existing trust or confidentiality obligations;
• Not allowed to trade in situations that could influence outcomes: If a user has sufficient power or influence to affect the outcome of the target event, then that user must not engage in any contract trading; users must also not trade according to the instructions of those who possess such power or influence.

To help users better understand what kind of behaviors would be defined as insider trading, Polymarket also provided specific examples on the Polymarket main site and the U.S. site market integrity rules, such as military personnel being prohibited from betting on upcoming military operations, political election candidates not being allowed to personally or encourage anyone to bet on their own election outcomes, and company CEOs being prohibited from personally or encouraging anyone to bet on "mention markets" involving themselves.

To effectively combat similar insider trading behaviors, Polymarket has also established a multi-layer monitoring system. When Polymarket or the community (Odaily Note: Any user can now report suspected insider trading behavior) detects suspicious trading activity, Polymarket will initiate a review, and take disciplinary actions, ban wallet addresses, initiate legal proceedings, or refer the matter to law enforcement if necessary.

Before Van Dyke's arrest, insiders might have thought that Polymarket's market integrity rules were just a bluff because, on a platform without KYC and settled in cryptocurrency, tracing on-chain addresses to catch the insiders hiding behind screens is extremely difficult and Polymarket would be unwilling to do such a thing.

But this line of thought is very naive. Firstly, the current regulations and on-chain tracking technologies are in fact very sophisticated and powerful. Users can avoid KYC on Polymarket, but they must undergo KYC at other deposit and withdrawal channels like exchanges; except for top hackers, general users have nowhere to escape from such tracking. Secondly, to gain the support of U.S. regulators, Polymarket will actively cooperate with law enforcement agencies to investigate insider trading, and for typical insider cases like Van Dyke, they will spare no expense in terms of manpower and resources.

At this point, if you are someone who knows some small insider information, you might still naively believe that you are not like Van Dyke, engaging in insider trading on such a high-profile event, or that you are not a U.S. citizen, and that the U.S. regulatory authorities or Polymarket can't do anything to you.

Polymarket and regulatory authorities will certainly not treat every insider trade with the same vigor as they did with Van Dyke. For some low-profit, limited-scope insider trading behaviors, digging out the true identities of the insiders or pursuing judicial procedures may seem like overkill. But Polymarket does have a trump card for dealing with these insider trades—banning addresses, and this move is what all insiders and users should truly fear, as it is even shaking the core narrative of Polymarket.

Cost

On April 23, the prediction market Kalshi disclosed that it fined three congressional candidates for betting on their own election results and banned them from accessing the platform for five years. How much profit do you think they made from this? In fact, the total fines for the three candidates amounted to less than $8,000, with one candidate even only betting $100.

The ability to handle insider trading so swiftly benefits from the KYC and compliance system that Kalshi has built since its inception, but small amount, low-impact insider trading on Polymarket might not even attract attention, let alone be dealt with.

This does not mean that Polymarket is subjectively condoning insider trading; rather, the self-regulation of Polymarket itself is highly challenging. The lack of KYC, low barriers to account creation, and on-chain anonymity make it difficult for Polymarket to manage and review users like Kalshi, creating a breeding ground for insiders. When the economic incentives for insider trading are high enough and the risks are low enough, human nature cannot withstand the test.

Odaily Planet Daily previously analyzed when insiders profited unlawfully using Polymarket during the capture operation of Maduro, stating that insider trading is a double-edged sword for Polymarket (Related reading: When War Gets Settled Before News: How Prediction Markets Price in the Capture of Maduro 6 Days in Advance).

On one hand, insider trading often means releasing information ahead of mainstream media, which brings Polymarket trading volume and surpasses media in information disclosure speed. Early pricing and predicting event outcomes gradually become the core narrative of Polymarket; on the other hand, insider trading also means premature leakage of information, and stakeholders will naturally resist, especially when regulation considers insider trading a threat to traditional information security, Polymarket will need to make choices between its security and the advantages brought by insider trading.

From the results, the introduction of the enhanced market integrity rules has already indicated Polymarket's position, but the cost is that users' trust in the platform may also erode.

Banning user addresses is a sensitive topic for a decentralized platform because any misuse or collateral damage could provoke user resentment and concerns about fund security. Ensuring that people worldwide can participate in prediction markets while guaranteeing deposit and withdrawal freedom has always been one of Polymarket's core competitive strengths, but when Polymarket grants itself the power to ban suspicious user accounts, not only will insiders no longer dare to trade on Polymarket, but normal profit-making users will also worry whether the platform will use this as an excuse to stop withdrawals. Once the floodgate of banning accounts is opened, it may never be closed again.

In summary, while severe crackdowns on insider trading can ensure Polymarket's safety from a regulatory perspective, it will inevitably weaken Polymarket's foresight and accuracy in predicting event outcomes, while also adding another layer of concern for users regarding the safety of their funds. Ultimately, a mature Polymarket may become an ordinary adult.

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