CFTC probes oil trades worth $800 million before Iran news

The U.S. Commodity Futures Trading Commission (CFTC) is scrutinizing a surge in oil futures trading that occurred moments before former President Donald Trump postponed strikes on Tehran in March, the Wall Street Journal reported Tuesday. The inquiry adds to growing concerns about traders using sensitive geopolitical information to profit in financial markets.

"This might be the most insane pattern we have found on Polymarket so far," Nicolas Vaiman, co-founder and chief executive of blockchain analytics firm Bubblemaps, told CBS News regarding a separate but related set of suspicious trades. "Luck alone cannot explain those numbers."

The CFTC is interested in at least three firms as part of its inquiry, according to the Journal. The probe is examining a flurry of trades worth an estimated $800 million that were placed shortly before the public announcement. This investigation parallels another case where blockchain investigators uncovered a network of nine anonymous accounts on the prediction market Polymarket that netted over $2.4 million by accurately predicting major developments in the Iran conflict, winning 98% of their bets.

The revelations highlight what a former CFTC lawyer described as "a new kind of insider trading," where individuals with advance knowledge of military or political decisions can place highly leveraged bets on their outcomes. Investigators fear that beyond financial fraud, this activity could pose national security risks, as hostile states could monitor betting markets for strategic signals of unannounced government actions.

The pattern of suspicious trading extends beyond the oil markets. Blockchain analytics firm Bubblemaps identified nine anonymous accounts on Polymarket created just days before America's first strikes on Iran in February. These accounts correctly predicted the timing of U.S. military actions, the reported removal of a key Iranian leader, and a temporary ceasefire, rarely losing money on more than 80 trades.

This follows federal charges against a U.S. Army Master Sergeant for allegedly using classified information to make over $400,000 betting on another international conflict. While prediction markets operate on public blockchains where all trades are visible, the traders' identities often remain anonymous, creating a challenge for regulators.

In a statement, Polymarket noted it has extensive market surveillance systems and cooperates with law enforcement when suspicious activity is detected, citing the recent prosecution as evidence its systems work. However, the convergence of geopolitical events and real-money betting markets is creating new challenges for regulators tasked with ensuring market integrity.

This article is for informational purposes only and does not constitute investment advice.