Federal prosecutors are continuing to litigate the fallout from the collapse of FTX, as defense teams push back on what juries can hear and how certain market activities are regulated. In the Southern District of New York (SDNY), Michelle Bond—whose husband, former FTX executive Ryan Salame, is serving a 90-month sentence after pleading guilty in 2023—has asked the court to block references to that guilty plea in a campaign finance case.
At the same time, other SDNY-related crypto-adjacent legal fights are highlighting how prediction markets and event contracts can collide with insider-trading and commodity regulation arguments. Separate actions involving a former congressman’s Kalshi trades and a US soldier accused of making a large Polymarket bet underscore that courts may soon be forced to clarify both evidentiary rules and the legal classification of event contracts.
Key takeaways
- Michelle Bond’s legal team asked SDNY to exclude evidence tied to Ryan Salame’s guilty plea, arguing it has little relevance to Bond’s alleged intent or knowledge.
- In a separate CFTC case, former New York Rep. George Santos was ordered to pay $35,000 over trades on Kalshi’s event contracts, with the regulator citing misleading posts about his planned attendance at the 2026 State of the Union.
- A US soldier accused of earning more than $400,000 on Polymarket event contracts is seeking dismissal, challenging whether the Commodity Exchange Act can clearly apply to event contracts as “swaps.”
- Across these matters, the central pressure points are evidentiary fairness for defendants and regulatory clarity for prediction-market participants.
Bond seeks to bar Salame’s guilty plea in campaign finance fight
According to a Friday filing in the US District Court for the Southern District of New York, Michelle Bond’s attorneys asked the court to preclude the government from introducing evidence about Ryan Salame’s guilty plea or any “related plea materials” in her campaign finance case.
Bond faces charges over alleged unlawful campaign funding tied to her unsuccessful 2022 congressional run in New York. The prosecution’s theory, as described in the filing, is that contributions supporting Bond’s campaign were partially funded through FTX arrangements facilitated by Salame.
Salame pleaded guilty in 2023 and is currently serving a 90-month sentence connected to conduct arising from FTX’s 2022 collapse. In Bond’s motion, her lawyers argued that Salame’s plea—where he admitted to making political contributions in Bond’s name funded by transfers from accounts associated with an FTX-linked entity—should not be treated as evidence against Bond herself.
“The Court should preclude the government from introducing or referring to Mr. Salame’s guilty plea or any related plea materials, because their minimal probative value is substantially outweighed by the risk of unfair prejudice to Ms. Bond,” the filing states.
Bond’s team further said that the plea materials do not meaningfully bear on Bond’s state of mind. They characterized the plea as an admission of Salame’s own guilt, not proof of Bond’s knowledge or participation in the charged conduct, quoting from the motion: “[…] Mr. Salame’s plea materials lack any probative value as to Ms. Bond’s guilt, knowledge, or intent. Mr. Salame’s plea is an admission of his own guilt, not evidence of Ms. Bond’s state of mind or participation in any charged offense.”
How personal litigation could become part of the argument
Bond’s motion also requested that the court allow information connected to her “contemporaneous divorce and custody proceedings.” Her lawyers appear to be positioning that personal context to rebut the government’s characterization of Bond as an “ordinary ‘individual’ donor,” despite her and Salame having divorced before the alleged criminal conduct.
While the filing’s request reflects a broader strategy often used in criminal litigation—attempting to shape how jurors interpret the campaign contributions and the parties’ relationship—the court’s decision will determine what personal-history evidence, if any, is ultimately presented.
CFTC penalizes George Santos for Kalshi event-contract trading
Separate from the FTX-linked litigation, the US Commodity Futures Trading Commission (CFTC) has issued an order involving George Santos, a former member of the US House of Representatives who was expelled from Congress in 2023. The CFTC ordered Santos to pay $17,500 in a civil monetary penalty plus $17,570 in disgorgement from profits earned through prediction market trading on Kalshi.
According to the CFTC, the relevant trades were tied to event contracts betting on whether Santos would appear at the 2026 State of the Union in Washington, DC. The regulator said Santos posted on social media about his plans to attend or not attend the event, and that these posts contained “material misrepresentations and omissions.”
The CFTC added that after the posts, contract prices moved in a direction favorable to Santos’ positions, enabling him to earn over $17,500.
As part of the CFTC order, Santos is barred from trading on prediction market platforms for three years.
The case also sits in the shadow of Santos’ criminal proceedings. Earlier coverage notes Santos was sentenced to 87 months in prison in 2025 for wire fraud and aggravated identity theft, though he served only three months before his sentence was commuted by US President Donald Trump, as reflected in the article’s background.
Polymarket insider-trading allegations tested under “swap” debate
A more direct challenge to prediction-market regulation is underway in another SDNY matter. Gannon Ken Van Dyke, a US soldier accused of making more than $400,000 trading Polymarket event contracts, is attempting to dismiss the indictment.
As outlined in the background of the case, prosecutors allege that Van Dyke traded using nonpublic information connected to a military operation involving the removal of Venezuelan President Nicolás Maduro in January. The US Department of Justice alleges he used that alleged insider information to wager on whether Maduro would be removed from power, leading to criminal charges filed in April.
In a Friday SDNY filing, Van Dyke’s attorneys submitted a 51-page memorandum supporting a motion to dismiss. Among other arguments, they contend that the Commodity Exchange Act (CEA) is ambiguous in how it treats event contracts as “swaps,” which is relevant to three of the charges.
Van Dyke’s lawyers argue that the ambiguity affects basic fairness: if the “swap” definition is not clear across Congress, agencies, and courts, ordinary citizens may lack “fair notice” that their prediction-market wagers fall under the CEA.
“If Congress, executive branch agencies, and courts all find the ‘swap’ definition ambiguous, how can ordinary citizens have fair notice that prediction market wagers are covered by the CEA?” the filing asks.
The defense also contrasts with the position taken by the CFTC under Chair Michael Selig, which has argued it has “exclusive jurisdiction” over prediction markets by treating event contracts as “swaps.” The dismissal motion suggests that—at least for some counts—those jurisdictional assumptions may not survive if the law is too unclear.
Why these cases matter beyond one courtroom
Taken together, the filings point to two urgent fault lines for the crypto-adjacent prediction market space: what evidence courts allow juries to consider when guilt and intent are contested, and whether the regulatory framework—especially the CEA’s treatment of event contracts—offers enough clarity for enforcement.
As courts weigh motions like Bond’s request to exclude plea materials and Van Dyke’s bid to dismiss based on legal ambiguity, traders, builders, and public officials using event-contract platforms may want to watch how judges define relevance, prejudice, and “fair notice.” The next procedural rulings could signal how far prosecutors can stretch existing statutes—and how tightly defendants can force regulators to justify their classification theories.
Be the first to comment