CFTC Curtailed Enforcement and Cleared the Way for Crypto and Prediction-Market Firms Tied to the Trump Family

Details

On May 24, 2026, The New York Times published an investigation by reporters Sharon LaFraniere and David Yaffe-Bellany titled "How Prediction Markets and Crypto Firms Steamrolled a Watchdog Agency." Drawing on agency records and interviews with more than 30 current and former staff members and company officials, the report describes a sweeping shift at the Commodity Futures Trading Commission. The CFTC is the primary federal regulator of derivatives, prediction markets, and certain cryptocurrency trading. Over the first 16 months of the second Trump administration, the report found, the agency's new leadership shrank its workforce, sidelined or removed career officials, sharply curtailed crypto enforcement, and repeatedly intervened to help prediction-market firms. Three of those firms have direct financial ties to the president's family.

The investigation arrives at a moment of unusual stakes for an obscure agency. Prediction markets have exploded in size, the Trump family has built a crypto fortune estimated in the billions, and Congress is weighing legislation that would make the CFTC the primary regulator of most of the U.S. cryptocurrency market. The findings have prompted a Senate records demand, a House insider-trading probe, and accusations of regulatory capture—alongside firm denials from the White House and the companies involved.

Background: A Small Agency With a Suddenly Enormous Portfolio

The CFTC was created primarily to police markets for agricultural commodities. It has always been small. The Times reported its workforce peaked at roughly 760 in 2015 and stood at about 550 as of March 2026—the lowest level since the depths of the 2009 financial crisis. Roughly a quarter of the staff was cut in the past year alone.

Its responsibilities, by contrast, have grown rapidly. A quirk in how cryptocurrencies are designed gives the CFTC authority over certain speculative transactions, including Bitcoin trading. The agency also has jurisdiction over "event contracts"—the binary yes/no wagers that power prediction markets like Polymarket and Kalshi. According to the Congressional Research Service, recent shifts in CFTC posture and favorable court rulings have allowed those markets to expand from niche contracts on weather and economic indicators into politics and sports.

The growth has been staggering. A TRM Labs analysis traced the surge to an October 2024 court ruling that let Kalshi offer election contracts. By February 28, 2026, Polymarket set a single-day volume record of $425 million, driven largely by Iran-war contracts. The two leading platforms took in roughly $51 billion in trades in 2025; a Bernstein estimate cited by CNBC projects volumes could reach about $240 billion in 2026 and approach $1 trillion by 2030. In October 2025, the parent of the New York Stock Exchange announced a strategic investment of up to $2 billion in Polymarket at an $8 billion valuation—an institutional legitimacy signal that underscored how mainstream the sector had become.

The Trump Family's Stake

What distinguishes this episode from an ordinary deregulatory shift is the president's family's direct financial interest in the industries the CFTC oversees.

Since the 2024 election, the Trump family has built a large crypto portfolio spanning the $TRUMP and $MELANIA memecoins, the World Liberty Financial venture and its USD1 stablecoin, the Bitcoin-mining firm American Bitcoin, and Trump Media & Technology Group's near-$1 billion in Bitcoin holdings. Fortune valued the family's crypto holdings at roughly $3 billion in early January 2026. A Reuters investigation reviewed thousands of documents and blockchain records. It estimated the family generated at least $2.3 billion in profit from crypto ventures through the end of April 2026. Over the same period, more than a million investors who bought in saw net losses totaling roughly the same amount. Bloomberg separately reported that previously undisclosed World Liberty token sales added about $660 million to the family fortune.

The three companies at the center of the CFTC investigation each connect to that empire:

• Polymarket received an investment from 1789 Capital, the venture firm partly owned by Donald Trump Jr., who also serves as an unpaid adviser to the company.
• Crypto.com is a business partner of Trump Media & Technology Group, with which it struck an exclusive deal in October 2025 to launch a prediction market ("Truth Predict") on Truth Social.
• Gemini's founders, twins Cameron and Tyler Winklevoss, are financial backers of American Bitcoin, the mining venture co-founded by Eric Trump. Each twin also donated $1 million in Bitcoin to Trump's reelection campaign.

A White House spokesman, Davis Ingle, told the Times: "President Trump only acts in the best interests of the American public. There are no conflicts of interest."

The Collapse in Crypto Enforcement

The most measurable change is enforcement. According to the Times, the CFTC announced just two cases involving digital assets in the second Trump era—both against individual operators accused of fraud, neither against a major crypto firm. That compares with more than 80 such cases during the Biden years and more than two dozen during Trump's first term, before the family entered the crypto business. The agency also dropped at least five other crypto investigations, including a late-stage inquiry into a major exchange. Across all categories, Sen. Elizabeth Warren's office cited a drop in enforcement actions from 58 in fiscal 2024 to 11 since the administration took office.

The Times documented one emblematic case. Over the 2025 Presidents' Day weekend, then–acting chair Caroline Pham directed staff attorneys to drop the agency's lawsuit against the crypto exchange KuCoin—a case the agency had treated as significant after KuCoin agreed to pay nearly $300 million in a related Justice Department matter. Pham lacked the votes to kill it outright, so staff rewrote the proposed settlement, citing a Trump executive order calling for a friendlier stance toward crypto. The agency ultimately settled in March 2026 for a $500,000 fine—a fraction of what its attorneys had originally expected. During the negotiations, KuCoin began listing two cryptocurrencies created by the Trump family's World Liberty Financial; KuCoin said the listing was routine and unrelated to its case.

Gretchen Lowe, a 30-year agency veteran who retired last year from a top enforcement post, told the Times: "I've been through an almost equal number of Republican and Democratic administrations, and there was always a belief you had to have strong enforcement. This is really the first time that politics have affected the C.F.T.C. in such a dramatic way." Joe Konizeski, a former Chicago-office attorney, said he was ordered twice to close investigations of crypto operators before his job was eliminated.

The Purge of Career Officials

The investigation's central allegation is that officials who raised concerns about the three Trump-connected firms were sidelined. Career staff worried that Crypto.com was not treating small bettors fairly, that Polymarket lacked adequate fraud protections, and that Gemini Titan, an affiliate of the crypto exchange Gemini, had not completed the required review to open for business. Despite those concerns, Pham and her senior counsel, Brigitte Weyls, intervened to help the firms, according to people familiar with the situation who spoke to the Times anonymously.

By the end of 2025, two officials who had raised questions were placed on administrative leave, barred from the office, and put under internal investigation. Three others who had enforced crypto laws faced the same treatment. None were told what they had done wrong. Current and former staffers told the Times the workforce took away a clear message: "Don't cause trouble for those industries."

The Times described several specific interventions. In December 2025, while staff were still examining Gemini Titan's application to enter prediction markets, Weyls reportedly sent them a draft memo recommending approval—a reversal of the normal process, in which staff prepare recommendations for commissioners rather than the other way around. The application was swiftly approved. The report also described Pham and Weyls discouraging staff from pursuing concerns about Crypto.com's treatment of retail bettors, and attending an unusual examination of Polymarket's anti-fraud protections. The same week Polymarket won approval to take bets through intermediaries—roughly two weeks after Donald Trump Jr.'s 1789 Capital invested in the firm—the agency placed a deputy director who had questioned those protections on leave.

The Revolving Door

Both senior officials who shepherded the firms' applications later joined the industry. Pham left the chair's office in December 2025 to join MoonPay, a crypto company whose prediction-market push runs through an "exclusive" partnership with Polymarket. Weyls started in March 2026 as general counsel for Gemini Titan—the same company whose application she had pushed through. A senior CFTC official told the Times that both followed federal ethics rules.

The leadership itself is drawn from the regulated industries. The current chairman, 36-year-old Michael Selig, represented crypto firms and worked with prediction markets as a corporate lawyer before his appointment. His path to the job was itself shaped by the industry: Trump initially nominated former commissioner Brian Quintenz, but Quintenz said his nomination collapsed after he refused to promise to support a complaint Gemini had filed against the agency. He released what he said were texts in which Tyler Winklevoss insisted he treat Gemini's complaint as the highest priority and offered to "raise this issue with the president himself." Trump pulled the nomination, and Selig was named instead.

A Regulator With No Checks

Selig is now the agency's sole commissioner. After the other commissioners departed in 2025, Trump left the remaining board seats vacant, dismantling the bipartisan structure that normally governs the CFTC and handing one person unilateral authority to file lawsuits and issue rules. At an April 2026 House Agriculture Committee hearing, lawmakers pressed Selig on the agency's bare-bones staffing even as it sought to expand its reach. The committee has since urged Trump to nominate four commissioners, warning the agency is ill-equipped to handle its growing responsibilities with just one member in place.

Under Selig, the agency has shifted from opponent to ally of the prediction-market industry. It has reaffirmed "exclusive jurisdiction" over event contracts and sued states—including Arizona, Connecticut, Illinois, New York, Wisconsin, and Minnesota—that tried to restrict the platforms under gambling laws. Selig has publicly called prediction markets "truth machines" and criticized the prior administration's approach as a "frolic into merit regulation." On June 10, 2026, the CFTC issued its first proposed framework for evaluating whether event contracts—such as those tied to terrorism, war, or gaming—are contrary to the public interest.

The Defense

The administration and the named companies reject the corruption framing. In his interview with the Times, Selig argued the commission had gone overboard during the Biden administration, turning minor violations into court cases, and said it is now focused on major wrongdoing. "If you're committing fraud, manipulation, abuse, insider trading in our markets, whether it's in crypto or anything else, our enforcement division is watching and will be a cop on the beat," he said, adding that the agency is hiring.

This reflects a genuine policy argument that predates the conflict-of-interest concerns: critics of the prior CFTC and SEC approach argue that "regulation by enforcement"—policing novel industries through lawsuits rather than clear rules—created uncertainty and punished good-faith actors. Many in the crypto industry welcomed the change as overdue clarity rather than favoritism. Polymarket said it has strong safeguards and "a comprehensive market integrity framework"; Crypto.com said it fully abides by all federal regulations and maintains a level playing field; Gemini did not respond to the Times' questions. The White House has consistently denied any conflict of interest, and no quid pro quo has been established.

There are limits to what the reporting proves. The investigation documents a pattern—personnel actions, dropped cases, expedited approvals, and family financial ties—but the staffers who were sidelined were not given official reasons, and the agency declined to discuss individual cases. The administration attributes some departures to a government-wide effort to shrink the federal workforce. Whether specific decisions were driven by political pressure, resource constraints, or legitimate legal reassessment is precisely what Warren's records request seeks to test.

Congressional and Expert Response

Reaction split sharply along the lines one would expect, but the substantive concerns extend beyond partisanship.

On June 5, 2026, Sen. Elizabeth Warren (D-Mass.), ranking member of the Senate Banking Committee, sent Selig a letter demanding records by June 18—including communications with prediction-market firms and a list of staff placed on leave. Citing the Times report, she wrote that the agency's "reported capture by industry poses severe risks to American families and our economy" and called a shrinking, less-active CFTC with expanding duties "a recipe for disaster." She also criticized Selig for asking a judge to vacate a $5 million penalty against Gemini.

Sen. Richard Blumenthal (D-Conn.), a longtime critic of the industry, wrote on X that the CFTC had become "a craven tool of prediction markets & shady crypto firms," and urged Congress to slow down on crypto legislation. Amanda Fischer, financial policy director at Better Markets and a former SEC chief of staff, called the report "bombshell reporting about a systemic culture of crypto and prediction market corruption."

Notably, scrutiny of the platforms is bipartisan. On May 22, 2026, House Oversight Committee Chairman James Comer (R-Ky.) opened an investigation into Polymarket and Kalshi over insider-trading concerns, signaling he may pursue legislation barring members of Congress, administration officials, and other government employees from participating. "There's a concern now that members of Congress, members of the president's administration, any type of government employee, can use basic insider knowledge and make huge profits on anything government-related," Comer told CNBC.

Why the Watchdog Question Matters: Insider Trading

The enforcement debate is not abstract. As the markets have grown, so have documented abuses. A federal indictment unsealed in April 2026 alleges that a U.S. Army master sergeant who helped plan the operation to capture Venezuela's Nicolás Maduro used classified intelligence to bet roughly $33,000 on Polymarket that the raid would happen, then cashed out about $409,000 when it did. According to the Times, more than 80 Polymarket users placed suspiciously timed bets, including wagers made hours before undisclosed U.S. and Israeli military operations against Iran. In April, Kalshi fined and suspended three federal candidates who had bet on their own races. In July 2026, the scrutiny reached inside the White House itself: Kalshi disclosed that a technical adviser and teleprompter operator for Trump, Gabriel Perez, had won nearly $100,000 on the platform's "mention markets"—wagers on which words or phrases a speaker will use—by betting on Trump's speeches, apparently trading on advance knowledge of the president's scripts. Kalshi's surveillance team froze his account and referred the trades to the CFTC; the White House placed Perez on unpaid administrative leave, and as of mid-July he was cooperating with regulators and negotiating a possible settlement.

The CFTC's single prediction-market enforcement case of the second Trump era was the Maduro-bettor prosecution. But as Stanford Law professor Joseph Grundfest told the Times, federal authorities should be examining the platforms themselves, not just individual bettors: "Usually when you find one ant, there are going to be more." Buried in that indictment was a detail suggesting the soldier had used an internet tool Polymarket says it bans to access an international platform the company had promised to wall off from U.S. customers—raising questions about the very safeguards the agency declined to scrutinize.

A Disputed June Episode: The Eric Trump UFC Texts

A murkier incident in June 2026 showed how insider-betting questions now reach the president's own family—though its central evidence was never authenticated, and it should be read with that caveat firmly in place. On the eve of "UFC Freedom 250," the UFC card staged on the White House South Lawn on June 14, 2026, to mark the president's 80th birthday and the America-250 celebrations (at an estimated $60 million taxpayer cost, per The New Republic), retired UFC champion Daniel Cormier posted—and deleted within roughly 15 minutes—screenshots of direct messages purportedly from Eric Trump. The alleged message asked, "Are any of the fights tomorrow rigged? I've been eying the Lopes fight, and I think an upset wouldn't be too unrealistic. $$"—which, if genuine, would amount to a presidential son soliciting insider information ahead of betting on a taxpayer-funded White House event. In the screenshots, Cormier's purported reply said he was "appalled" by the question, and his since-deleted post declared he "would not tolerate insider behavior."

The record then dissolved into denials and deletions, as The New Republic recounted. Eric Trump—co-founder of American Bitcoin, whose Winklevoss backers figure in the CFTC story above—flatly denied the exchange, telling a Wall Street Journal reporter, "That is absolutely not me. I didn't even know who the guy was… This is some kind of AI spoof," and saying he had "never spoken to Daniel." Cormier himself then backtracked, telling a reporter "I got hacked or something. Who believes stuff like that? That's crazy." ESPN, Forbes, Newsweek, and Cybernews all covered the episode without resolving whether the screenshots were a real leak or an AI fabrication, and no regulatory investigation had been reported as of mid-July 2026.

Unverified as it is, the episode is germane to this file for reasons that hold either way. The White House fight card drew heavy betting action on Polymarket—the platform whose fraud safeguards CFTC staff had flagged and whose approvals the agency expedited—and spawned "Is Polymarket rigged?" commentary among traders. If the texts were real, a member of the family whose ventures benefit from the CFTC's lighter touch was fishing for an insider edge in exactly the kind of market the weakened agency is supposed to police. If they were fabricated, as Eric Trump maintains, the incident illustrates how cheaply AI-generated "evidence" can now muddy market-integrity questions—a problem that makes credible, independent regulatory fact-finding more important, not less. Either way, the incident underscored that with a single-commissioner CFTC and a House insider-trading probe still underway, there was no obvious watchdog positioned to establish what actually happened.

The CLARITY Act and What Comes Next

The stakes are about to rise. Congress is advancing the CLARITY Act (H.R. 3633, the Digital Asset Market Clarity Act), which would hand the CFTC primary oversight of most of the digital-asset market—shifting authority away from the better-staffed Securities and Exchange Commission, which has roughly seven times the personnel. The bill passed the House and, after clearing the Senate Banking Committee 15–9 in May 2026, is now the subject of an intense Senate push, with a pivotal hearing set for July 17, 2026. Warren and others argue the agency cannot responsibly absorb that mandate in its current, weakened state, while industry groups—more than 200 digital-asset companies and trade associations, according to Morrison Foerster—have urged the Senate to pass the bill quickly.

A Proposed Guardrail: Quorum Requirements

The single-commissioner condition documented above is precisely what one reform proposal seeks to make impossible. Writing in The Bulwark on July 12, 2026, Todd Phillips—a consultant and former Georgia State law professor—argued (this is opinion analysis) that the CLARITY Act should serve as the first test case for a structural workaround to the Supreme Court's June 2026 ruling in Trump v. Slaughter, which overturned Humphrey's Executor and let the president fire independent-agency commissioners at will (that ruling and its fallout are tracked in the companion files on the Lisa Cook Fed case and the administration's second-term Supreme Court record). Phillips and University of Minnesota law professor Nicholas Bednar—who filed an amicus brief in Slaughter and laid out the argument in a law-review article, "Commission Quorums"—contend that Slaughter left one lever untouched: Congress may still write an agency's quorum rules so that members of both parties must be seated, and not recused, before the agency can act at all.

Applied to the CLARITY Act, the idea is that the SEC and CFTC—the two bipartisan commissions the bill tasks with writing the rules that will govern a multitrillion-dollar asset class—could be barred from advancing those rules unless a bipartisan quorum is present. The president could still fire a commissioner, as the Court now permits, but a firing that broke the quorum would simply freeze the agency until the Senate confirmed a replacement, rather than handing one party unilateral control—the very single-commissioner scenario this file documents at the CFTC. Phillips frames this as a "structural guardrail, not a personnel mandate": because it never depends on anyone's job being protected, it does not implicate the removal power the Court just expanded. He acknowledges the proposal is only a partial fix and faces real political headwinds—the crypto industry poured roughly $170 million into the 2024 cycle and, per Reuters, another $189 million into the current midterms—but argues both parties have reason to back it, since the party out of the White House stands to benefit under any future administration, and the Republican chairman of the committee overseeing the CFTC has himself acknowledged "the importance of having Democrats and Republicans on the Commission." The proposal has not been adopted and no senator has yet introduced such an amendment; it is noted here as a documented, actively-argued response to the agency-independence problem this file describes, timed to the very bill that would enlarge the CFTC's power.

The episode mirrors changes the Times and others have documented at the SEC, where the administration has also embraced the view that regulators were too punitive toward industry. Whether that represents a healthy correction of overreach or the capture of an independent watchdog by the businesses—and the family—it is meant to oversee is the question now before Congress and, potentially, the courts. What is not in dispute is the agency's condition. It is about to be handed authority over a trillion-dollar market. And it has lost roughly a quarter of its staff, much of its enforcement capacity, and the bipartisan structure designed to keep any single official—or any single administration—from steering it.