Breaking! War predictions have unexpectedly become a "front-running" hunting ground, as internal warnings from the White House reveal the biggest powder keg in the crypto market.

By the end of March, the U.S. administrative agencies sent an internal email to all staff, directly addressing a gray area: prohibiting the use of non-public information obtained through official duties to place bets in futures or prediction markets.

The timing of this email was quite delicate. The day before, news about suspending military operations was released through a specific social media platform. However, about fifteen minutes before this news was made public, unusual trading activity appeared in the oil futures market. Data showed that in less than 120 seconds, contracts worth over $8B were settled.

Subsequently, before the final ceasefire agreement was reached, three accounts on a well-known prediction market platform made precise bets on the timing of the event, collectively earning over $600,000. An official spokesperson confirmed the authenticity of the email and reiterated that using government information for personal profit is prohibited, while dismissing reports of misconduct by internal personnel as baseless. Currently, there is no direct evidence of information leaks.

Prediction markets allow users to bet on various future events and cash out profits in a relatively anonymous manner. This feature creates a mismatch with the regulatory framework of traditional financial markets. Existing federal ethics rules already prohibit employees from participating in gambling at the workplace and strictly forbid using insider information for personal gain. A senior official who received the email revealed that this warning was more like a “reminder” targeting recent news hotspots.

The rules are old, but the anonymity of crypto prediction markets presents new challenges for regulation. Similar “precise” trading cases have occurred multiple times. In January of this year, a trader, within less than five hours of a politician being controlled, heavily bet on their resignation on the same prediction platform, earning over $400,000. In February, Israeli authorities arrested several individuals suspected of using military secret information to bet on their own country’s military actions on the same platform, including reservists.

These events have sparked strong public reactions. A well-known investor bluntly called the matter “disgusting” on his podcast, and speculated that a small circle within the government had prior knowledge of key decisions. He noted that the timing of the trades was so coincidental that it was hard to ignore.

Legislative pressure is mounting. Some senators criticized such prediction markets for turning serious geopolitical issues into gambling games and creating motives for leaks of national security information. They have jointly proposed legislation to ban betting on predictions related to wars or military actions altogether. The proposers pointed out that corruption and exploitation are thriving in the loopholes and gray areas of these markets. Currently, the prediction market platform collaborates with mainstream financial data providers.

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