Kalshi "Haminin Abdication" $50 million contract sparks controversy! CEO issues a call: Reject death arbitrage

Author: Ariel, Crypto City

Kalshi “Hamedini Resignation” Prediction Contract Settlement Sparks Controversy
Following the joint US and Israeli airstrikes that resulted in the death of Iran’s Supreme Leader Ali Khamenei, the prediction market Kalshi’s CEO Tarek Mansour stated that their primary goal was to prevent investors from profiting off the death event.
The contract titled “Will Khamenei Step Down as Iran’s Supreme Leader” specifies that if Khamenei dies, settlement will be based on the last trading price before death. When news of Khamenei’s death broke, a large amount of funds flooded into the contract, and Kalshi suspended trading due to chaotic settlement processes.
Kalshi later admitted that the settlement terms had ambiguous language and decided to refund users’ net losses. Sources told Bloomberg that this move cost the platform about $2.2 million.

Kalshi’s promotional tactics cause controversy; settlement standards criticized
After Kalshi processed refunds, criticism surged in the community, mainly because Kalshi had promoted this contract at the time of the incident. Last Saturday morning, news of Khamenei’s death began circulating, Kalshi posted on X (Twitter) saying: “Breaking: The probability that Khamenei is no longer Iran’s Supreme Leader has surged to 68%,” and Mansour himself retweeted this message.

Former SEC Chief of Staff Amanda Fischer criticized this, saying Kalshi’s actions were akin to providing a market for assassination.
Users also criticized Kalshi’s settlement standards, pointing out that when Jimmy Carter passed away, the platform settled his inauguration contract as “No,” and accused Kalshi of only applying special clauses when traders would lose money.
Dennis Kelleher, CEO of Better Markets, pointed out that Kalshi’s actions reveal an attempt to balance between increasing trading volume and avoiding clear laws banning assassination-related trades.

Prediction markets crossing the line; US lawmakers call for investigation
Prediction markets are often seen as “anything can be traded,” but this incident shows their limits. Before the US and Israel’s airstrikes on Iran, California Democratic Senator Adam Schiff wrote to CFTC Chairman Michael Selig, demanding strict crackdown on prediction contracts related to war and assassination, with a deadline of March 9 for responses.
Connecticut Democratic Senator Chris Murphy also stated he is drafting legislation to ban such market contracts to prevent insider trading and manipulation over outcomes, and the Khamenei settlement controversy proves that these betting markets should not exist at all.

Polymarket’s wordplay also sparks controversy
Compared to Kalshi, Polymarket still hosts 187 Iran-related markets. One of these predicts whether the US will forcibly remove Khamenei before March 31. Polymarket ultimately settled the outcome as “No,” reasoning that the US only contributed or assisted in the killing operation, which sparked strong dissatisfaction among some commentators and calls for dispute resolution.
Since Polymarket relies on blockchain-based decentralized settlement mechanisms, the fairness of contract judgments continues to face challenges.
On-chain data shows that, hours before the airstrike, six mysterious wallets collectively bet on “The US will attack Iran before February 28,” ultimately earning about $1.2 million. These wallets were almost all newly created accounts in February, with funds transferred within 24 hours before the operation. The abnormal trading patterns also raised concerns about military secrets leaking and fueled accusations of on-chain insider arbitrage.