CFTC Warns Kalshi of Possible Charges Over Contract Notifications

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CFTC Warns Kalshi of Possible Charges Over Contract Notifications

The US Commodity Futures Trading Commission has privately warned Kalshi that it could face enforcement charges over whether the prediction market operator properly notified the agency about dozens of proposed contracts, according to Crypto.news, which cited a November 10 POLITICO report and a person familiar with the investigation. The reported warning follows several months of scrutiny into whether Kalshi complied with federal requirements for submitting new products before making them available for trading.

Key facts

• The CFTC privately notified Kalshi of possible charges, though no formal action has been announced, per Crypto.news and PANews, both citing POLITICO.
• Kalshi spokesperson Elisabeth Diana called the matter “a procedural error involving the submission of a handful of contracts, many of which weren’t live” and said the company is already addressing it.
• The dispute centers on self-certification, which lets regulated exchanges list certain derivatives without explicit CFTC approval provided they notify the agency and certify compliance with settlement and anti-manipulation requirements.
• On July 24 the CFTC’s Division of Market Oversight issued an advisory cautioning that “broad, template-style certifications should not be submitted,” without naming any operator.
• Separately, the CFTC is investigating whether Polymarket complied with restrictions from its 2022 settlement, which included a $1.4 million civil penalty.

Two accounts of how many contracts are at issue

The scope of the filing problem is contested. A person familiar with the investigation told POLITICO that regulators are reviewing notification requirements involving dozens of proposed products, as reported by Crypto.news and PANews. Kalshi’s account, given to POLITICO and summarized by Cointelegraph, describes a narrower problem: procedural errors affecting a handful of contracts, many of which were never live.

That gap has not been resolved publicly. The agency has not identified which contracts are under review, and no proposed penalty figure has been disclosed.

The investigation sits inside a broader fight over self-certification, which has become a point of contention as exchanges roll out contracts tied to political, sporting and financial events. CME Group CEO Terry Duffy has questioned whether some event contracts carry adequate protection against manipulation.

Why it matters

How the CFTC resolves this determines how quickly prediction markets can list new contracts. Self-certification is the mechanism that let Kalshi expand its offerings after a 2024 court win against the CFTC over political event contracts, so a stricter reading of filing requirements would slow product launches across the sector.

The timing adds weight. Democratic lawmakers plan to step up congressional oversight of prediction market operators when the next Congress begins, following their November 2026 midterm victories, and a formal CFTC action would hand them a concrete case to examine. The dispute also overlaps with the question of whether event contracts are federally regulated derivatives or state gambling products, which several state authorities have contested. Kalshi has argued the former.

Kalshi’s commercial position remains strong despite the scrutiny: the company completed a $1 billion funding round in October at a $40 billion valuation, co-led by Wellington Management and Sequoia Capital. It also joined Coinbase, Payward, DRW, Jump Trading and Paradigm in backing the CFTC’s authority over US stock-linked perpetual futures.

What to watch

The next concrete signal is whether the CFTC converts the private warning into a formal enforcement action or settles. Also watch the parallel Polymarket review, which examines advertising, location controls and safeguards tied to its separate US operation. No final enforcement decision has been announced in either case.

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