Kalshi & Coinbase coalition attacks Polymarket pre-US Congress
After the insider trading scandal regarding Nicolás Maduro's capture, the Coalition for Prediction Markets (CPM) launched a million-dollar campaign in the Washington Post. The goal is to convince legislators to distinguish between platforms regulated by the CFTC and "offshore" operators like Polymarket.
The prediction markets industry is experiencing an internal rift. The Coalition for Prediction Markets (CPM), which groups heavyweight regulated companies such as Kalshi, Coinbase, Crypto.com, and Robinhood, has decided to draw a line of fire against Polymarket. Through a full-page advertisement in the Washington Post published this Wednesday, the group seeks to distance itself from the insider trading accusations shaking the sector.
The trigger was a recent case that exposed the vulnerability of decentralized platforms. A user on Polymarket earned US$ 409,882 by betting that Venezuelan president Nicolás Maduro would be removed from power, just hours before news broke of his capture by U.S. forces. This move, highly suspicious of insider trading, has alerted regulators and threatens the stability of the entire ecosystem.
Differentiating regulated markets from insider trading on offshore platforms
The marketing campaign, valued at seven figures, carries a central message: prediction markets regulated by the Commodity Futures Trading Commission (CFTC) already prohibit the use of insider information. A CPM spokesperson explained to Business Insider that the advertisement aims to draw a sharp contrast with "offshore platforms" where scandals like Maduro’s or the case of the trader who earned US$ 1 million by anticipating Google data occur.
The technical difference the coalition tries to sell to public opinion is crucial. While CPM members operate under Designated Contract Market (DCM) licenses and require strict identity verification (KYC), Polymarket operates on blockchain and, although it technically blocks U.S. IPs, lacks direct federal oversight over the real identity of its users. For the CPM, the lack of controls in decentralized competition is the true systemic risk.
How the Polymarket scandal is driving new restrictive laws in Congress
The regulated industry’s fear is that these scandals will motivate Congress to ban the activity altogether, which could reverse the historic judicial victory Kalshi achieved in 2024 against the CFTC, which legally validated political event contracts. To navigate these turbulent waters, the CPM has hired two heavyweight former congressmen: Democrat Sean Patrick Maloney as CEO and Republican Patrick McHenry as senior advisor.
The legislative urgency is real. Representative Ritchie Torres has already introduced a bill to classify insider trading on prediction sites as a federal crime, a direct reactive measure to the Maduro scandal. Additionally, the coalition seeks to counter the narrative of the American Gaming Association (AGA), an industry group that argues these markets cannibalize state sports betting tax revenues by operating as "unregulated casinos."
Kalshi and Coinbase strengthen compliance to legitimize prediction markets as financial instruments
Beyond advertising, coalition members are taking operational measures to demonstrate their transparency. Kalshi has reinforced its institutional commitment with the announcement of opening a physical office in Washington D.C. on January 26. Through social media and outlets like the Financial Times, the group insists that federal authorities must oversee unregulated activity that tarnishes the reputation of legitimate operators.
In a recent campaign video, Maloney emphasized that coalition members know exactly who executes each transaction thanks to their identification protocols. With this, they seek to position prediction markets not as gambling, but as a legitimate financial instrument requiring the same integrity and oversight as Wall Street.
Tags: United States, USA, Polymarket, Kalshi, Coinbase, United States predictive markets, predictive markets regulation