Prediction market platform Kalshi permanently banned former U.S. House member George Santos (조지 산토스) and imposed a $71,356 fine, blockchain outlet Decrypt reported on Aug. 31 local time.

Santos was found to have traded directly in a market set up on whether he would attend the State of the Union address, then moved the price through public remarks to profit from the spread.

Kalshi's compliance department said in a disciplinary notice dated Aug. 28 that Santos repeatedly made large trades from Feb. 2 to Feb. 25 in a market whose outcome depended on whether he attended. Under exchange rules, a party that can influence the outcome cannot trade that market, but Santos violated the restriction.

An investigation found Santos made public remarks multiple times about whether he would attend, and some were false or could cause misunderstanding. Kalshi judged he made the remarks to move the price of the "Yes" and "No" contracts. The compliance department wrote the remarks did affect prices and that Santos earned $17,839.57 in profit as a result.

Kalshi viewed Santos' actions as violating rules banning market manipulation, barring trading by parties with influence over an event's outcome, and prohibiting fraud through deceptive methods. It also applied an allegation of non-cooperation in the investigation. Kalshi permanently suspended Santos' direct and indirect access to the platform, and said this was the first lifetime ban imposed on a former federal House member.

The case is cited as another example that has again exposed integrity risks emerging alongside growth in the prediction market industry. Prediction markets allow users to buy and sell "Yes" or "No" contracts on the outcomes of real-world events such as elections, sports or economic indicators. Contract prices move to reflect the market's assessment of the likelihood of occurrence.

Platforms such as Kalshi and Polymarket have sharply expanded trading volumes over the past year. Kalshi, in particular, which is regulated by the U.S. Commodity Futures Trading Commission, has drawn billions of dollars in trading and institutional interest as event contracts became more popular. As the market expanded, issues such as insider trading and market trust also quickly rose to the surface.

Recently, the U.S. Commodity Futures Trading Commission (CFTC) fined a former White House teleprompter operator who traded using advance information on a presidential speech. A MrBeast video editor was fired during an investigation into insider trading on Kalshi, and a U.S. service member was indicted over allegations related to Polymarket trading. The Santos discipline was a follow-up measure amid this string of cases.

Kalshi said it strengthened monitoring measures after the Santos case. As prediction markets move closer to mainstream financial products, how well they can block conflicts of interest between traders and people tied to the real-world events remains a key task.