A US special forces soldier accused of using classified military intelligence to profit from prediction market trades is asking a federal court to dismiss the charges, saying prosecutors are trying to criminalize conduct that is not prohibited under existing law.
He Earned Over $409,000
Master Sgt. Gannon Ken Van Dyke was indicted in April on three counts of violating the Commodity Exchange Act (CEA), along with wire fraud and conducting an unlawful monetary transaction. The Justice Department has described the prosecution as the first insider trading case involving a prediction market.
Prosecutors say that Van Dyke used confidential information about the US operation to capture Venezuelan leader Nicolás Maduro to place successful trades on Polymarket, earning roughly $409,000 from an initial investment of about $33,000.
The trades allegedly included contracts that predicted whether Maduro would be removed from power by the end of January 2026 and whether US forces would enter Venezuela.
Just a few days after the operation took place, Van Dyke was photographed aboard the USS Iwo Jima, the ship that brought Maduro to the United States.
Unprecedented Interpretation of the Law
In a 51-page motion filed on July 31, Van Dyke’s attorneys argue that the indictment relies on an unprecedented interpretation of federal law and should therefore be dismissed.
“The government indicted Gannon Van Dyke using two theories: one, novel, never before prosecuted, and unsupported by the law; the other, already rejected by the Second Circuit,” the defense wrote.
“This Is Gambling, Not Hedging”
One important argument focuses on whether Polymarket’s event contracts should qualify as “swaps” under the regulation of the Commodity Exchange Act.
Defense attorneys contend Congress intended the law to regulate financial derivatives used to hedge commercial risk, not wagers on future events.
“This is gambling, not hedging,” the motion argued.
The filing also warns that adopting the government’s interpretation would dramatically expand federal authority over betting markets, possibly bringing ordinary wagers on elections, political events, or other future outcomes within the scope of federal financial regulation.
Van Dyke’s lawyers further argue that the wire fraud charge should be dismissed because confidential military planning information does not constitute “property” under federal wire fraud law. Given that the money laundering allegation depends on the wire fraud count, they contend that charge must also be thrown out.
The defense continues to argue that, should lawmakers want to ban trading on confidential government information in prediction markets, Congress is the one who should establish clear legislation providing notice of such restrictions, and not prosecutors.
If convicted on all five counts, the special forces soldier could face a maximum sentence of 60 years in federal prison.