A U.S. Army Special forces soldier accused of using classified intelligence to make hundreds of thousands of dollars in online bets appeared in federal court for the first time Tuesday afternoon.
Army Master Sergeant Gannon Van Dyke pled not guilty to charges including wire fraud, theft of government information, and unlawful use of classified intelligence.
The case hinges on Van Dyke's alleged use of a prediction market, which are platforms where users can bet on everything from elections to global conflicts.
He faces a maximum 20 years in prison for the top charge if he were to be convicted, but he could ultimately receive far less.
He was released on $250,000 bail, and his travel abilities have now been restricted.
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These charges test how far insider trading laws could go when it comes to prediction markets. According to federal prosecutors, Van Dyke used classified information tied to a U.S. operation targeting Nicolas Maduro, the Venezuelan president, to place a bets on the military operation that captured him.
Prosecutors allege that Van Dyke was involved in the planning and execution of the operation and that in the days leading up to it, he used the prediction market platform Polymarket to place roughly $30-35,000 in bets on if U.S. forces would be in Venezuela and if Maduro would be out of power. When these events unfolded, those bets paid off and netted him more than $400,000.
Meanwhile, a parallel civil case from federal regulators is likely to draw even more attention beyond the courtroom because it highlights the growing concern around prediction markets.
A question that has yet to be answered is whether these markets should be treated more like Wall Street, where trading on inside information is clearly illegal.
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