NEW YORK — George Santos agreed to pay $35,000 to settle a federal investigation into his trades on the prediction marketplace Kalshi. The Commodity Futures Trading Commission imposed a three-year trading ban on Santos as part of the resolution.

The settlement resolves an investigation into Santos betting against his own plans to attend President Donald Trump’s State of the Union address. The agreement includes more than $17,000 in disgorgement of earnings from the trading and a fine of $17,500. Santos settled with the agency and noted that he did not admit to doing anything wrong.

Santos stated he agreed to the payment without admitting to the allegations to “put this matter behind him.” He won a congressional seat representing parts of Queens and Long Island in New York before his expulsion. Santos was expelled from Congress and charged with federal wire fraud and identity theft related to his campaign funding. He pleaded guilty and served less than three months of a more than seven-year sentence before receiving clemency from President Trump.

Kalshi reported Santos to regulators and said it will pursue its own enforcement action and work to reimburse traders if monetary penalties are recovered. The federal probe into the Kalshi trading prompted Polymarket to cut ties with Santos in June. Santos commented on the situation in March, stating, “I guess people lost money. Some people made unexpected money. That’s to show you how fragile these markets are.”

The settlement shows regulatory scrutiny of prediction markets where individuals trade on real-world events. Kalshi’s decision to report Santos and seek reimbursement for traders reflects the platform’s effort to maintain market integrity following the incident. The three-year trading ban prevents Santos from participating in regulated commodity futures markets during that period.

The case connects to broader questions about the reliability of prediction markets when participants have insider knowledge or conflicting incentives. Polymarket’s earlier decision to sever ties with Santos indicates that other platforms also view such conduct as a risk to their operations. The outcome leaves open questions regarding the specific enforcement actions Kalshi will pursue independently and the mechanics of trader reimbursement.

Why It Matters

The settlement establishes a regulatory precedent for prediction markets by penalizing traders who act on non-public information regarding their own scheduled appearances. The three-year ban and financial penalties signal that federal regulators will enforce integrity standards in these emerging platforms, treating them similarly to traditional commodity futures markets. Kalshi's commitment to seek trader reimbursement further illustrates how platform cooperation with authorities can mitigate losses resulting from such conduct.