Manhattan judge considers whether ex-special forces soldier's prediction market bet on Nicolas Maduro's ouster was insider trading

A Manhattan federal judge on Wednesday appeared skeptical of the arguments by a defendant's lawyer to dismiss wire fraud and insider trading charges against an ex-special forces soldier who allegedly made more than $400,000 on a prediction market bet that former Venezuelan president Nicolás Maduro would be deposed.

Lawyers for Gannon Van Dyke, 38, a former master sergeant with the U.S. Army Special Operations Command, insisted the $34,000 Polymarket contract he placed on the success of the military operation, which he helped plan and took part in, was a gamble, not a regulated commodities trade.

Van Dyke was indicted in April on insider trading, theft of classified information and commodities and wire fraud charges.

The Commodity Futures Trading Commission also filed civil charges against him for insider trading.

Prediction markets, on platforms like Polymarket and Kalshi, can blur the lines between futures trading and gambling. Contracts, or “swaps,” can be purchased for “yes” or “no” on the outcome of a particular event, like the winner of the Oscars or the temperature in New York City on a given day.

Federal prosecutors charge that after Van Dyke began taking part in the planning of the top-secret mission to capture Maduro and his wife, Cilia Flores, in the presidential palace outside Caracas, he took out several contracts, or shares, on the markets for “Will the U.S. invade Venezuela by January 31” and “Maduro out by January 31”.

“This is gambling, not hedging,” defense lawyer Daniela Manzi argued. She said under the Commodities Exchange Act swaps must have a direct connection to an economic outcome.

In Van Dyke’s case, the bet on Maduro’s ouster had no direct economic fallout.

U.S. District Judge Margaret Garnett pressed the defense attorney on this point, asking her to consider the oil wealth of Venezuela.

The judge also appeared to wonder if possible futures bets on the war in Iran and Ukraine would fall under the same category.  She also questioned whether Van Dyke’s alleged use of the invasion plan to place the bet was a clear indication the law had been broken.

“The core criminality [accused] is using confidential or classified information as part of your role as a government official,” the judge said. “The swap is just part of it.”

Garnett also pointed out everyone must sign an agreement with Polymarket not to use inside information on any bets on its platform.

The defense team also hoped to get the wire fraud charge dropped from the case, arguing no victim was defrauded.

“Who does he pay restitution to?” Zach Intrater, another defense attorney representing Van Dyke, asked. “You can never figure that out.”

Garnett did not say when she would rule, but set a motion schedule for November, ahead of the trial date, which is set for Dec. 7.