Kalshi has permanently barred former US Representative George Santos, making him the first trader to receive a lifetime ban from the prediction market platform over alleged market manipulation.

The company said Santos earned approximately $18,000 through trades tied to whether he would attend Donald Trump’s State of the Union address. Kalshi determined that he attempted to influence the market by combining large positions with public statements about his expected attendance.

The case comes as prediction markets face increasing scrutiny over market integrity and the steps they take to prevent abusive trading. Regulators have recently pursued similar cases, while competing platforms are introducing additional safeguards as activity around the US midterm elections is expected to increase.

Kalshi said Santos placed a number of large trades in contracts whose outcomes depended on his presence at Trump’s speech. He later made several public comments about whether he would attend, which the company said were aimed at shifting the prices of the relevant “Yes” and “No” contracts. Kalshi said some of those statements were inaccurate or misleading.

Santos did not attend the event, producing the outcome tied to his winning position. Alongside the lifetime ban, Kalshi imposed a fine exceeding $70,000 in an enforcement action announced last week. Federal authorities have reportedly also been examining the matter. Santos did not immediately respond to CoinDesk’s request for comment.

The former congressman was expelled from the House in 2023 after facing criminal investigations. He was later serving a prison sentence for fraud before Trump commuted his sentence last year.

Kalshi said the Santos case was one of five enforcement actions recently completed by the platform. Its regulatory responsibilities include taking steps to identify and prevent manipulation. The other four cases resulted in temporary trading bans after the individuals cooperated with Kalshi’s investigations.

A Kalshi spokesperson said Santos would receive further financial penalties and remain permanently prohibited from trading because of his failure to cooperate with the investigation.

Regulators Step Up Enforcement

The Commodity Futures Trading Commission, which supervises the prediction market sector, also took action against former White House employee Gabriel Perez.

Perez was fined more than $170,000 and prohibited from trading for three years. The CFTC said his cooperation with investigators contributed to a reduction in the penalties.

Perez previously served as a White House teleprompter operator and traded Kalshi contracts based on whether Trump would use specific words during public appearances. These so-called “mention” contracts pay out when designated words are spoken by public figures during specified events.

Polymarket, another major prediction market, is also strengthening its surveillance measures as the US midterm elections approach and regulators pay closer attention to trading activity.

Shana Bautista, Polymarket’s global head of investigations and intelligence, told Reuters that the company relies on machine learning, blockchain analytics, trade surveillance and open-source intelligence to identify unusual activity.

Polymarket said it has sent more than 100 cases to authorities for further review. The cases include wagers allegedly involving a US soldier accused of using classified information to bet on the capture of Venezuelan President Nicolás Maduro, as well as suspected insider trading before US military operations in Iran.

The company also said its safeguards prevent most US-based users from accessing its international platform, following the requirements of a 2022 settlement with the CFTC.