Gannon Ken Van Dyke, the US soldier indicted over allegations that he wagered on the exit of Venezuela leader Nicolas Maduro at Polymarket, has claimed the “baseless” charges should be dismissed.
Van Dyke submitted a motion to dismiss charges brought against him by the Commodity Futures Trading Commission (CFTC).
His lawyers claim that the CFTC is overstepping its authority and the contracts related to Maduro’s exit do not qualify as swaps under the Commodity Exchange Act (CEA).
Contracts Not Swaps, Claims Van Dyke’s Lawyers
“(T)he event contracts at issue were merely geopolitical bets as to whether Maduro would be ‘out’—removed from power—at any point during a certain period. Such geopolitical bets are not ‘swaps’ subject to the Commodities Exchange Act, and transactions concerning such event contracts cannot serve as a basis for liability under” CFTC regulations, stated the motion to dismiss the complaint.
It does not deny that Van Dyke placed the wagers; instead, it focuses on the markets’ technical definition and claims that the CFTC is overstepping its authority.
In addition to the CFTC lawsuit, Van Dyke is facing criminal charges for violating the CEA, wire fraud, and an unlawful monetary transaction. The charges carry a total maximum sentence of 60 years in prison. He pleaded not guilty in April and was released on a $250,000 bond.
Despite the CEA prohibiting markets related to war, Polymarket continues to promote markets on several conflicts worldwide in the wake of Van Dyke’s arrest.
Van Dyke Allegedly Won Over $400,000
Prosecutors allege that Van Dyke placed over $33,000 in bets on Maduro to be out as leader with Polymarket, generating a profit of over $400,000.
“Van Dyke was involved in the planning and execution of Operation Absolute Resolve, a military operation to capture Maduro, and had access to sensitive, nonpublic, classified information about that operation,” said the Department of Justice (DOJ) in a press release.
U.S. Attorney Jay Clayton for the Southern District of New York stated, “The defendant allegedly violated the trust placed in him by the United States Government by using classified information about a sensitive military operation to place bets on the timing and outcome of that very operation, all to turn a profit. That is clear insider trading and is illegal under federal law.”
He added, “Those entrusted to safeguard our nation’s secrets have a duty to protect them and our armed service members, and not to use that information for personal financial gain. Our Office will continue to hold accountable those who misuse confidential or classified information in a way that undermines and exploits our national security.”
Van Dyke Used Money to Expand Property Business
In addition to his role as a soldier, Van Dyke managed a property business, Better Homes, along with his wife. The company describes itself as a “small veteran-owned property management company.”
The BBC reported that he owns at least five properties, which are available to rent on AirBnB. His most recent purchase was a $340,000, three-bedroom, 2,400-sq-ft (223-sq-m) home, purchased 20 days after Maduro’s capture.
His social media profiles emphasized his role as a businessman rather than a soldier, but have been deleted in the wake of the scandal.
First Use of the ‘Eddie Murphy Rule’
The complaint marks the first time the CFTC has filed charges for insider trading involving event contracts and the first time it has used the “Eddie Murphy Rule.”
The Eddie Murphy Rule is the colloquial term for the ban on insider trading using misappropriated government information.
It gets its name because of Murphy’s 1982 movie Trading Places, where his character foils plans to bribe a government official to get confidential information on the year’s orange crop harvest.
At that time, no one could have predicted how the CFTC would become such a powerful agency in regulating markets on sports, conflicts, and everything else in between.
CFTC Chairman Michael Selig emphasized that the agency has a zero tolerance for insider trading when announcing the complaint against Van Dyke.
“I have been crystal clear that anyone who engages in fraud, manipulation, or insider trading in any of our markets will face the full force of the law,” said Selig. “The defendant was entrusted with confidential information about U.S. operations and yet took action that endangered U.S. national security and put the lives of American service members in harm’s way.”
In addition to Van Dyke, an Israeli military official is facing charges of using insider information to trade on war-related markets at Polymarket.
