In a sequence of events that sparked accusations of market manipulation and insider trading, former President Donald Trump issued a stark threat against Iran on a Saturday in late 2025, when global financial markets were closed. Trump demanded that Iranian leaders reopen the Strait of Hormuz—a critical chokepoint for global oil shipments—within 48 hours, warning the U.S. would “obliterate” the country’s power plants if they refused.
The standoff appeared to de-escalate just before U.S. markets reopened on Monday. Trump posted that the U.S. and Iran had held “VERY GOOD AND PRODUCTIVE CONVERSATIONS REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST.” The announcement triggered an immediate rally in equity markets.
The timing and nature of the two posts drew intense scrutiny. Observers noted the pattern resembled previous instances where Trump’s policy shifts—on tariffs or foreign interventions—preceded unusual market activity. More concretely, a massive surge in trading volume was detected in key futures markets roughly 15 minutes before Trump’s de-escalatory post.
Nobel Prize-winning economist Paul Krugman highlighted the anomaly in a Substack post, pointing to significant purchases in New York Mercantile Exchange (NYMEX) West Texas Intermediate (WTI) crude oil futures, Brent crude contracts, and approximately $1.5 billion in S&P 500 futures contracts. “People close to Trump are trading based on national secrets,” Krugman wrote.
The scale and precision of the trades prompted immediate questions from lawmakers. Senator Chris Murphy (D-Conn.) posted on social media: “A $1.5 BILLION BET. Bigger than any futures purchases made at the time. 5 minutes before Trump’s post. Who was it? Trump? A family member? A White House staffer?” He called it “mind blowing corruption.” Senator Andy Kim (D-N.J.) echoed the demand for investigation, stating, “Someone made a fortune. We need immediate investigations into these trades.”
This trading pattern was not isolated. Similar, highly profitable bets were placed on prediction markets like Polymarket around other Trump-era events. For instance, one trader made $400,000 on a Polymarket contract that Venezuelan President Nicolás Maduro would be removed from power following a U.S. intervention.
Regulatory Posture and Enforcement Gaps
The Commodity Futures Trading Commission (CFTC) is the primary regulator for U.S. futures markets and, to a growing extent, prediction markets like Kalshi and Polymarket. However, under the current Trump administration, the agency’s enforcement posture has shifted dramatically from the previous administration.
During the Biden administration, the CFTC actively scrutinized these platforms. In 2022, it fined Polymarket $1.4 million for operating as an unregistered commodities market and barred it from U.S. operations. The agency also sued to prevent Kalshi, a registered entity, from offering event contracts based on political outcomes. This enforcement stance reversed after Trump returned to office in 2025. The CFTC dropped its case against Kalshi and its investigation into Polymarket, effectively welcoming the prediction market back to the U.S. Notably, both Kalshi and Polymarket named Donald Trump Jr. as an adviser in 2025. The CFTC did not respond to inquiries from Rolling Stone regarding whether it would investigate the trades surrounding the Iran announcement.
This regulatory shift aligns with a broader decline in financial enforcement. At the Securities and Exchange Commission (SEC), the CFTC’s sister agency, enforcement actions dropped to record lows during Trump’s first term and plunged again after his 2025 return. Last week, the SEC’s Director of Enforcement, Margaret Ryan, abruptly resigned. CNBC reported she “clashed with agency leaders over the direction of its enforcement program, including the handling of cases with ties to President Donald Trump and his family.” Ryan declined to comment.
Legislative Response and Platform Reactions
Amid public outrage and nascent congressional efforts, the prediction market platforms themselves announced rule changes. Polymarket, where a trader reportedly netted over $1 million on Iran-related bets, said it would update policies to prohibit trading on “stolen confidential information,” “illegal tips,” or events where a user could influence the outcome. Kalshi announced bans on politicians trading on their own campaigns and on individuals involved in sports betting on those sports.
On Wednesday, bipartisan members of the House introduced the PREDICT Act (Preventing Real
