Four years after Polymarket paid $1.4 million to settle with U.S. regulators and barred bets from American users, the explosive case against a soldier charged with trading on classified information is offering the prediction market a chance to come in from the cold.

Gannon Ken Van Dyke, an active-duty special forces soldier, was charged with using advance knowledge of the U.S. operation to capture Venezuelan President Nicolás Maduro to make $440,000 via Polymarket bets.

The arrest came after months of speculation in the press and on social media that insiders with access to classified information have been capitalizing on their knowledge. In fact, Van Dyke’s alleged Maduro bet was picked up by media outlets almost immediately after it occurred, though his identity was not yet known. Other successful bets that raised suspicions have involved Google’s 2025 Year in Search, the launch of OpenAI’s AI web browser and events surrounding the war with Iran.

The concerns drew the attention of Michael Selig, a member of the Commodity Futures Trading Commission, who is looking to assert his agency’s jurisdiction over prediction markets amid a push from individual states while also trying to resist a narrative that his agency was not committed to policing insider trading. On Friday, founder Shayne Coplan suggested Polymarket planned to continue to aggressively crack down on illicit activity on the platform.

“Grateful the DOJ officially acknowledged Polymarket’s cooperation on this case,” Coplan said. “Noise aside, the reality is we work proactively with all relevant authorities on any suspicious activity on our marketplace. We flagged this, referred it, and cooperated throughout the process. This happens constantly behind the scenes, despite what many are led to believe.”

That’s a noticeably different tone than the one Coplan struck in an interview with “60 Minutes” in November, in which he insisted “having an edge” is “a good thing.”

While there are two dominant prediction markets, Polymarket and U.S.-based Kalshi, most of the concern has focused on Polymarket. Even with Thursday’s announcement, experts say it remains unclear where Polymarket fits under U.S. regulations. One of its entities is registered in Panama, where at one point 97% of trades were handled. It’s an ambiguity experts say insider traders may have counted on in calculating the risk of engaging in illicit activity.

Chris Ehrman, an attorney who previously served as head of the CFTC’s whistleblower office, said the fact that Van Dyke was criminally charged shows the Trump administration is taking the issue of insider trading more seriously than many may have believed.

Absent strong regulation, Ehrman said, “the potential benefit of making these bets outweighs the cost of being incarcerated.”

As part of a consent decree signed with Biden-era regulators, Polymarket banned U.S. users from placing bets on its platform. In the wake of heavy lobbying by the company, the Trump administration has made allowing Polymarket to operate in the U.S. a priority in the president’s second term. Donald Trump Jr.’s venture capital firm, 1789 Capital, has also invested in Polymarket. The younger Trump also serves as an adviser to Kalshi, another prediction market.

Yet experts say Polymarket seemed to continue to operate in a legal gray area because its operations remain offshore. According to the Justice Department’s indictment, Van Dyke used a virtual private network to open his account and place his bets.

At the same time, trading on Polymarket is publicly visible, although users’ identities are not. The page for each event contract hosted by Polymarket displays top holders, the dollar amount of their positions, and all activity related to trades for the event. While users themselves are anonymous, their trade history is not.

That allows anyone to see who is making unusually outsized gains. For instance, an account trading under the username “Magamyman” has earned about $1 million betting on geopolitical events mostly related to the Iran war.

“A lot of the data is open by design,” Nick Vaiman, founder of Bubblemaps, an analytics group devoted to tracking activity on sites like Polymarket, said in an email. Bubblemaps has also highlighted one user who made approximately $300,000 correctly betting on the individuals President Joe Biden would pardon in his final days in office.

Vaiman said Polymarket’s structure “makes independent analysis possible and creates a level of transparency you don’t get with [a] more closed platform like Kalshi.”

Yet Kalshi is fully regulated by U.S. authorities, and bets there are somewhat less easy to track because it isn’t on the blockchain, a digital ledger of electronic transactions. Earlier this week, Kalshi announced it had fined and suspended three political candidates for engaging in insider trading on their own races.

It is not clear whether Polymarket has ever kicked off users for similar offenses, though one month ago, an Israeli air force official was charged with making illicit bets on the platform.

A representative for the company did not respond to a request for comment. Earlier Thursday, Polymarket said it had identified a user trading on classified government information and referred the matter to U.S. authorities. Last month, it updated its rules to explicitly ban trading on stolen or misused confidential information, and explicitly warned users it would refer suspicious activity to investigators.

In a separate civil complaint unveiled Thursday, the CFTC said Van Dyke first attempted to open an account on an unidentified U.S.-regulated events-prediction trading platform but was unable to do so. The only other such platform is Kalshi. A representative for Kalshi confirmed to NBC News that Van Dyke did attempt to open an account on its platform.

Jeff Le Riche, a former CFTC chief trial attorney now in private practice, said it was notable that Polymarket was described by the Justice Department as being based in New York City.

“Being listed as U.S.-based is a shot across the bow,” he said, largely for other crypto-based exchanges that may be registered offshore but which have U.S.-based users. “If you’re an entity accepting U.S. customers and not complying with U.S. regulations, that entity could be in the crosshairs.”