The US House Committee on Oversight and Government Reform is widening its investigation into insider trading in prediction markets, bringing Hyperliquid Labs, Crypto.com and Aristotle Exchange, the operator of PredictIt, into scope.

The committee has asked the three companies to explain their user identity verification mechanisms and how they identify, investigate and report suspicious trading activity.

The move expands on the committee's earlier inquiries into Kalshi and Polymarket.

Committee Chairman James Comer began investigating the two largest prediction market platforms in May, and those inquiries are still ongoing, with the committee having received nearly 1,000 documents and held five briefings with the companies.

Focus shifts to KYC and suspicious trading detection

In letters to the three companies, Comer focused on their "know your customer" (KYC) policies and the specific internal procedures used to identify, investigate and report unusual transactions.

The central concern is whether prediction markets, after rapid expansion, have built compliance systems sufficient to address insider information trading.

Prediction markets let users buy and sell binary contracts tied to sports, elections, wars and other future events. As trading volumes rise, some markets now touch highly sensitive political and geopolitical events, drawing more attention to the risk that non-public information could be used for trading.

Comer said some traders have already used non-public information to profit on these platforms, and the committee wants to confirm whether the platforms have met their legal obligations and taken sufficient steps to identify and stop insider trading before it happens.

Several highly suspicious trades form the backdrop

Over the past year, prediction markets have seen multiple cases that raised insider trading concerns.

In April, a US service member was arrested on suspicion of using inside information to bet on Polymarket that former Venezuelan leader Nicolás Maduro would be ousted, with the trades reportedly generating about $400,000 in profit.

Another investigation in May found that more than 80 users on Polymarket had carried out trades with suspicious characteristics, including positions opened hours before US and Israeli strikes on Iran.

Former US Representative George Santos also drew attention for betting on Kalshi about whether he would attend this year's State of the Union address. He had publicly hinted he would attend, and Kalshi permanently banned his account and fined him $71,356.

Those episodes pushed Kalshi and Polymarket to tighten their internal insider trading rules this year and led Congress to expand its scrutiny to other platforms.

A Hyperliquid trade becomes a new focal point

In a letter to Hyperliquid CEO Jeff Yan, Comer specifically cited a trade that took place in October 2025.

Reports said a trader built a large leveraged short position on Hyperliquid minutes before an undisclosed US tariff policy was announced.

Comer argued that the timing of the trade overlapped closely with a government decision that had not yet been made public, while the platform appeared to lack adequate identity verification and mechanisms to refer responsible parties to US law enforcement, making it similar to other suspicious insider trading cases the committee is examining.

Investigation widens from leading platforms to the whole industry

The action means US congressional attention to prediction markets is no longer limited to the two leading platforms, Kalshi and Polymarket, but is beginning to examine compliance capabilities across the industry.

As prediction markets expand from sports and elections into war, tariffs and other events that may involve non-public government information, regulatory focus is shifting further from product legality toward trade surveillance, identity verification and prevention of insider information use.

Hyperliquid, Crypto.com and Aristotle Exchange had not publicly responded to the committee's requests as of the time of publication.

Next, the key question for the investigation will be whether these platforms can prove that their KYC and suspicious trading monitoring mechanisms are sufficient to identify bets using non-public information, and whether regulators will further require prediction markets to adopt insider trading controls closer to those in traditional securities and derivatives markets.