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Gannon Ken Van Dyke appeared in a Manhattan courtroom on Tuesday after prosecutors said he made more than $400,000 from trading on the basis of classified information about the timing of the US military operation.
Van Dyke, an active-duty soldier at a military base in North Carolina, allegedly made roughly 13 bets on positions, including “US Forces in Venezuela” and “Maduro out” by certain dates, while he had access to classified information.
The 38-year-old is charged with the unlawful use of confidential government information for personal gain, theft of non-public government information, commodities fraud, wire fraud and “engaging in a monetary transaction in property derived from specified unlawful activity”.
From: US soldier pleads not guilty over prediction trades on Maduro capture.
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The soldier left a trail of alleged transactions that made him easy to track down, noted Rajiv Sethi, a Barnard College economics professor who studies prediction markets. “A more sophisticated trader would have been harder to catch, given the absence of identity verification on Polymarket,” Sethi said.
Van Dyke funded his alleged trades with transfers from a U.S. cryptocurrency exchange, and later moved his winnings back to that exchange, before depositing them in his bank account, according to the CFTC lawsuit.
Blockchain data shows the exchange he used was Coinbase, a major U.S. crypto marketplace that is required to verify its customers’ identities. A Coinbase spokesperson said the company couldn’t comment on specific customers but said it “works closely with global law enforcement agencies to combat crime.”
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The Maduro bets were just one in a series of controversies that have swirled around Polymarket’s unregulated offshore platform, which has long had an edgy, anything-goes culture. The platform uses cryptocurrencies to settle bets.
Unlike on U.S.-registered prediction markets, the offshore platform’s users don’t have to provide ID to set up accounts, helping keep them anonymous. Its blockchain-based technology, however, allows amateur sleuths to spot suspicious trading activity.
From: Arrest of U.S. Soldier Signals Polymarket’s Wild-West Days Are Ending – WSJ.
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The soldier left a trail of alleged transactions that made him easy to track down, noted Rajiv Sethi, a Barnard College economics professor who studies prediction markets. “A more sophisticated trader would have been harder to catch, given the absence of identity verification on Polymarket,” Sethi said.
Van Dyke funded his alleged trades with transfers from a U.S. cryptocurrency exchange, and later moved his winnings back to that exchange, before depositing them in his bank account, according to the CFTC lawsuit.
Blockchain data shows the exchange he used was Coinbase, a major U.S. crypto marketplace that is required to verify its customers’ identities. A Coinbase spokesperson said the company couldn’t comment on specific customers but said it “works closely with global law enforcement agencies to combat crime.”
Now, as it happens, Polymarket is now enticing users to provide identifying information by offering them faster trading speeds. Earlier this month, it rolled out an online portal where individual customers can submit information including passports, licenses and proof of residence. Submitting the information isn’t mandatory. But customers who complete the forms can access Polymarket’s U.K.-based server, which offers the fastest trading speeds, giving them an advantage of milliseconds over other users. Those milliseconds make a difference for the key subset of their customers who drive significant levels of high-speed, automated trading volume. A difference of milliseconds can make or break some trading strategies.
It’s almost as if identity is the new… well, you know.
Snippings 