CFTC Issues Risk Warning on Manipulation of Prediction Market "Reference Contracts"

According to Decrypt, on September 23, the U.S. Commodity Futures Trading Commission’s (CFTC) Market Surveillance Division issued an advisory opinion classifying “mention-type contracts” in prediction markets that involve specific individuals’ statements, appearances, handshakes, photographs, and social media interactions as products presumed susceptible to manipulation. The CFTC noted that the settlement outcomes of such contracts can be actively controlled by the parties involved, and relevant insiders (such as those holding draft speeches or guest lists) may possess material non-public information. Exchanges seeking to rebut this presumption must provide detailed monitoring mechanisms and risk control evidence, including measures such as establishing restricted participant lists, third-party reviews, and position limits. This advisory opinion was issued approximately three weeks after the CFTC fined former White House teleprompter operator Gabriel Perez $172,000 for trading “presidential mention contracts” after learning the contents of the president’s speech in advance. The advisory opinion is not legally binding and represents only the stance of the division's staff.