Last autumn, a quiet power struggle unfolded within a little-known federal agency. Three companies linked to the Trump family’s business empire sought approval from the Commodity Futures Trading Commission (CFTC) to expand into the highly popular prediction markets sector.

Prediction markets have now become an increasingly significant part of the agency’s regulatory portfolio. Americans can place bets on events ranging from trivial matters—such as what color tie President Trump will wear next—to major geopolitical shifts like whether the U.S. will take over Cuba. This market holds massive commercial potential, yet the operational practices of several firms have sparked widespread controversy.

Senior agency officials expressed deep concerns: they worried that Crypto.com failed to treat small bettors fairly; believed Polymarket’s anti-fraud safeguards were vulnerable; and noted that a third firm—an affiliate of cryptocurrency company Gemini—had not even passed required compliance reviews before opening.

Multiple sources, fearing retaliation, spoke anonymously. Despite internal dissent, acting Chair Caroline D. Pham and her chief legal counsel intervened to help these firms achieve their goals.

By Christmas Eve, two senior managers who questioned these companies were placed on administrative leave, barred from entering agency facilities, and subjected to internal investigations. Three other senior officials responsible for cryptocurrency enforcement faced identical treatment—coincidentally, all with ties to the Trump family’s interests in the crypto and prediction markets sectors.

These officials were never informed of the specific misconduct alleged against them. Yet current and former employees alike told interviews this episode sent a clear message across the institution: do not trouble these industries.

A New York Times investigation reveals that this core regulator of financial niches has repeatedly been constrained by powerful interest groups it is supposed to oversee, with the suspension of these officials merely one symptom of systemic capture.

The probe found that during the past 16 months of Trump administration, the CFTC systematically reduced staffing, purged experienced public servants, dramatically eased enforcement against the cryptocurrency industry, and actively facilitated operations for prediction market firms.

The deep entanglement between the Trump family and both the cryptocurrency and prediction markets sectors explains why the agency’s functions have been significantly weakened. The Trump family has issued its own digital currency, amassing substantial wealth through it, while also forging commercial partnerships with multiple prediction market operators.

Several top figures driving this transformation themselves have financial stakes in these industries. After leaving office, Caroline D. Pham joined a crypto firm partnered with Polymarket; her chief legal counsel, Brigitte Weyls, was hired by a prediction market company—one whose prior application she had helped advance.

Michael S. Selig, 36, the current CFTC chair, previously served as corporate counsel for multiple cryptocurrency firms and deeply engaged in prediction market activities. Appointed by Trump and aligned with the Republican Party, he remains the sole commissioner due to the president’s failure to fill other seats.

This exceptional personnel arrangement grants Michael S. Selig unilateral authority to initiate litigation, set regulations, and fully oversee the two industries at the heart of Trump’s commercial empire.

White House spokesperson Davis Ingle stated: “Every decision made by President Trump is in the best interest of the American people, with no conflict of interest whatsoever.”

The shift in regulatory stance confirms how the Trump administration has compelled formerly independent regulators to bend to its will—similar changes occurred at the SEC. Now both agencies endorse the president’s view that past enforcement actions were excessively harsh across various sectors.

Gretchen Lowe, who spent three decades at the agency and retired last year from a senior enforcement role, said: “I’ve seen Republican and Democratic administrations alike. Everyone once agreed enforcement must be strict. This is the first time political influence has impacted the CFTC so drastically.”

Caroline D. Pham and Brigitte Weyls declined interview requests. However, Pham publicly criticized the misuse of prosecutorial power by the agency’s enforcement division last year.

Polymarket claims to have robust risk mitigation systems; Crypto.com asserts strict adherence to all federal regulations; Gemini did not respond. The CFTC’s female spokesperson refused to discuss the fates of involved staff or the handling of specific cases.

With enforcement power diminished, millions of individuals participating in cryptocurrency trading and prediction market betting—and the broader financial system increasingly intertwined with these sectors—are now exposed to heightened risks. Both industries continue to grapple with persistent fraud and regulatory violations: scams thrive in crypto, while insider trading remains a chronic issue in prediction markets.

In interviews, Michael S. Selig argued that under the Biden administration, the CFTC’s enforcement was overly aggressive, routinely litigating even minor infractions. He emphasized that the agency now focuses exclusively on serious misconduct and maintains impartiality.

He stated: “Regardless of whether it’s cryptocurrency or any other domain, whenever there is fraud, market manipulation, improper conduct, or insider trading, our enforcement team will remain vigilant and fulfill its duties without bias.”

Yet this strong rhetoric stands in stark contrast to the actual enforcement record of the agency during Trump’s second term. To date, the commission has only initiated two cryptocurrency-related cases, targeting individual operators—not a single major crypto firm.

In contrast, under Biden, there were over 80 such cases resolved through civil courts or administrative channels. Even during Trump’s first term, when his family had not yet heavily entered the crypto space, the commission still prosecuted more than 20 related cases.

In the realm of prediction market regulation, facing ongoing legal disputes over industry compliance, the CFTC has shifted from regulator to industry ally. Since Trump’s second term began, the agency has opened only one case—against an individual accused of insider trading.

Originally established to curb illicit activity in agricultural markets like pork bellies, the CFTC’s mandate has expanded—but enforcement rigor has consistently declined.

Prediction markets are now rapidly growing, falling under speculative financial transactions, which inherently fall within the CFTC’s jurisdiction. Two major platforms collectively processed $50 billion in trades throughout 2025, and just in March and April of this year, transaction volume reached that level.

Currently, the White House is pushing legislation to further expand the agency’s regulatory authority, granting it additional responsibilities in the cryptocurrency space.

Meanwhile, the Trump administration continues to cut agency staffing. The department has long operated with lean resources; its workforce peaked around 760 employees in 2015. As of March this year, only about 550 remain—its lowest count since the 2009 financial crisis trough.

Cryptocurrency Enforcement: A Full Retreat

In February 2025, just one month after Trump’s inauguration, CFTC lawyers were enjoying the President’s Day long weekend. Some relaxed in snowy ski cabins in Vermont; others attended classical concerts in New York City.

An urgent phone call abruptly shattered the holiday. It came from Brian Young, head of the agency’s enforcement division, delivering instructions from Acting Chair Caroline D. Pham.

At 45, Pham had interned at the agency early in her career, cultivated extensive networks across government and finance, and frequently socialized with executives in regulated industries. In 2022, following a Republican vacancy in a bipartisan committee, President Biden appointed her as a commissioner.

After Trump elevated her to acting chair, she adopted bold tactics, often posing for photos with corporate leaders in the sectors she oversaw. Her holiday directive, however, was unprecedented and nearly impossible to execute: instructing the legal team to drop the CFTC’s lawsuit against cryptocurrency exchange KuCoin.

For an agency already operating with limited resources, this was a high-stakes case.

During the Biden administration, most cryptocurrencies were under SEC oversight, which treated them as stocks and bonds traded on Wall Street. But the technical nature of crypto granted the CFTC jurisdiction over certain speculative transactions—including Bitcoin, the world’s largest digital currency.

Previously, the commission had fined Binance, the world’s largest crypto exchange, $1.35 billion—a landmark case. Prosecuting KuCoin was intended as another signal of the agency’s commitment to strict crypto oversight.

KuCoin, headquartered in Seychelles, had already pleaded guilty in a U.S. Department of Justice case and agreed to pay nearly $300 million in penalties for ignoring laws against crime and illicit transactions. Simultaneously, KuCoin tentatively agreed to settle the CFTC’s allegations of unlicensed operation.

Pham lacked direct authority to dismiss the case—it required majority support from commissioners. With two Democrats still serving, her chances were slim.

Faced with this impasse, the legal team opted for compromise: they restructured the settlement agreement and invoked a presidential executive order during court proceedings, demanding a more accommodating approach toward the crypto industry.

During negotiations, KuCoin announced the launch of two new digital tokens—issued by World Liberty Financial, a crypto startup owned by the Trump family. The listing significantly boosted the family’s visibility in the industry and expanded its user base.

The case dragged on until March this year, when the CFTC finally reached a settlement. KuCoin’s parent company ultimately paid only $500,000—a fraction of the initial projected penalty in the millions.

KuCoin released a statement claiming the launch of World Liberty Financial tokens was routine business expansion unrelated to the pending litigation. A spokesperson for World Liberty Financial added that multiple exchanges had already listed its digital assets.

According to official documents and former employees, the commission also dropped investigations into at least five other crypto firms, including post-approval audits of a major exchange.

In spring 2025, Pham’s team launched an investigation into three senior enforcement officials handling crypto cases: Gretchen Lowe, chief legal counsel and first deputy of enforcement; Manal Sultan, deputy director of enforcement; and K. Brent Tomer, chief trial attorney.

The official justification was vague, citing only “improper handling of some enforcement matters.”

Subsequently, the agency cited organizational streamlining to terminate Sultan and Tomer; two senior trial attorneys handling crypto cases were demoted; and Lowe resigned.

Multiple former officials told reporters outright that Pham’s move targeted enforcement staff handling major crypto cases. Andrew Rodgers, a former lead trial attorney who left last year, said: “Someone has been deliberately sidelining those handling major crypto enforcement cases.”

Joe Konizeski, a former Chicago-based attorney, said he received two direct orders prior to being laid off last summer to halt investigations into crypto operators.

He commented: “The CFTC’s posture effectively tells crypto violators that regulators won’t hold them accountable anymore.”

The President Gets Involved

For Gemini, the timing of regulatory retreat came too late. In January 2025, just before a scheduled trial, Gemini settled, paying $5 million in fines. The agency had accused the company of misleading its staff during a Bitcoin auction.

However, Gemini avoided further liability stemming from the case.

Founders Cameron and Tyler Winklevoss are close allies of Trump. They are major political donors, sponsors of White House events, investors in Donald Trump Jr.’s private club, and contributors to Eric Trump’s co-founded crypto venture.

In the settlement, Gemini did not admit wrongdoing and pledged not to claim the charges were baseless. Yet just five months later, the company filed a complaint with the CFTC Inspector General, criticizing both the case and the prosecutors involved.

Tyler Winklevoss posted the complaint on X (formerly Twitter), accusing public officials of abusing power: “These officials wasted millions in taxpayer funds on a politically motivated lawsuit to advance their careers.”

Reports suggest the Winklevoss brothers did not stop there—they allegedly attempted to use the complaint to influence the appointment of the agency’s top leadership.

While Pham served as acting chair, Trump nominated Brian Quintenz in February 2025 to lead the agency. Quintenz had previously served as a CFTC commissioner and was a board member of a prediction market firm. However, in September, he revealed via social media that his nomination had failed because he refused to pledge support for Gemini’s appeal.

Quintenz shared private chat logs showing Tyler Winklevoss demanding the highest priority for Gemini’s appeal and stating, “I’m happy to personally bring this up to the President.”

Quintenz wrote that after refusing to comply, the Winklevoss brothers complained directly to Trump. By late September, Trump formally withdrew his nomination.

At the time, Gemini’s spokesperson declined to comment on the messages. The White House stated the president only nominates individuals aligned with his policy vision and committed to American priorities. Michael S. Selig did not address Gemini’s appeal.

Multifaceted Interference in Regulatory Approvals

Gemini still had more demands to fulfill.

Its subsidiary, Gemini Titan, had sought entry into the prediction market since 2020 but remained unapproved. Last year, Gemini resubmitted its application.

In December, staff were reviewing the submission when they received a special memo signed by Brigitte Weyls, directly recommending approval.

Under normal procedure, such recommendations should originate from frontline staff and be escalated through the chain of command—especially while the review process was ongoing. Nevertheless, Gemini Titan’s application was swiftly approved.

According to insiders, this was the third instance of Pham and Weyls intervening to favor prediction market firms with ties to the Trump family.

Shortly after Trump’s second term began, Crypto.com obtained prediction market operating licenses. However, a brief note in a public filing raised red flags among some staff. They suspected Crypto.com secretly granted preferential access to large trading institutions, allowing them to outpace ordinary sports bettors—without disclosing this practice transparently.

Insiders say Pham and Weyls not only discouraged staff from pursuing the inquiry but also excluded relevant personnel from meetings with Crypto.com.

Crypto.com’s management declined to comment on communications with the agency, asserting that its operational rules are open and transparent, ensuring fair conditions for all users and full compliance with disclosure requirements.

Crypto.com maintains a close business alliance with Trump Media & Technology Group, with Trump himself as the company’s largest shareholder. In October last year, they struck a exclusive partnership to jointly expand into prediction markets. Trump Media & Technology Group declined to respond to inquiries.

The most consequential event centered on Polymarket. Years of regulatory scrutiny followed the company over repeated compliance issues. In 2022, Polymarket paid a $1.4 million fine to the CFTC for offering betting services to U.S. users without proper authorization.

In November 2024, following the U.S. election betting surge, the old case was reopened. The FBI conducted a raid on founder Shayne Coplan’s Manhattan residence, prompting the CFTC to launch its own investigation.

The Trump administration dropped both investigations in July of the following year. That same month, Polymarket acquired a compliant entity, enabling it to launch a new platform for U.S. users.

The next month, Polymarket submitted a new application seeking approval to operate through intermediary channels. While such models can expand customer reach, they also allow bad actors using insider information to conceal their activities and evade detection.

Less than two weeks after submitting the application, Polymarket announced funding from investment firm 1789, partially owned by Donald Trump Jr. Additionally, the company hired Donald Trump Jr. as a non-paid advisor. His spokesperson stated he did not participate in any affairs between Polymarket and federal regulators.

Last autumn, the U.S. government experienced a six-week shutdown. Yet the CFTC still convened staff to process Polymarket’s application.

During a November meeting, interim market regulator Rahul Varma and deputy compliance officer Rachel Berdansky raised concerns about Polymarket’s anti-fraud defenses. Notably, Brigitte Weyls attended the session—unusual for her role.

That same week Polymarket’s application was approved. Shortly thereafter, Rachel Berdansky was placed on administrative leave and investigated; she has since officially retired. By year-end, Rahul Varma was also removed.

Vince McGonagle, former head of the division who had been reassigned after delaying Gemini’s application, chose to leave after his suspension.

Last year, a wave of departures led to a reduction of roughly one-quarter in agency staff—the largest annual attrition in nearly two decades. Despite this, the CFTC spokesperson insisted current staffing levels were sufficient for regulatory duties.

Pham and Weyls subsequently left public service to join firms under CFTC oversight. One senior official confirmed both transitions complied with federal ethics rules.

In March, Brigitte Weyls officially became general counsel at Gemini Titan—the very company she had championed earlier. Meanwhile, Caroline D. Pham stepped down as acting chair in December, joining MoonPay, a crypto firm planning to enter the prediction market and already announcing a exclusive partnership with Polymarket.

A New Regulatory Landscape

Michael S. Selig, who assumed leadership in December, became the sole top official at the CFTC.

After other commissioners departed, Trump appointed only Selig, leaving all other seats vacant. This broke the original checks-and-balances framework, granting the new chair absolute power to reshape the entire institution.

Soon after taking office, Selig began attending industry conferences and guest-hosting tech podcasts. He dismissed misinformation, labeled prediction markets as “truth machines” capable of generating real insights. In major policy disputes, he consistently sided with the crypto industry—even suing several states attempting to regulate prediction market sports betting.

In interviews with The New York Times, Selig promised to revitalize enforcement and claimed the agency was expanding staffing.

But the reality is different: the enforcement division’s original staffing was 105 positions; this expansion added only three new roles. Meanwhile, the White House continues pushing for structural shifts, aiming to transfer more crypto regulatory authority from the SEC to the CFTC—despite the SEC having seven times the SEC’s workforce.

The most prominent enforcement case this year exposed a clear shift in regulatory direction. Last month, the DOJ and CFTC jointly charged a U.S. military special forces soldier with placing bets on Polymarket based on classified intelligence—specifically wagering on the removal of Venezuelan President Nicolás Maduro. Notably, the soldier had participated in the covert operation itself.

Michael S. Selig cited the case as proof of the agency’s rigorous oversight.

Yet a key detail in the indictment is telling: the soldier placed bets on Polymarket’s international platform. In its 2022 settlement, Polymarket had pledged to completely separate its international platform from U.S. users. The indictment also noted the soldier used network tools explicitly banned by Polymarket—yet the document omitted his precise location.

Joseph A. Grundfest, a professor at Stanford Law School specializing in prediction markets, argues regulators should thoroughly investigate Polymarket and its business model—not just pursue this one soldier. He remarked: “Finding one ant means there’s likely an entire colony behind it.”

After the case surfaced, Polymarket founder Shayne Coplan stated the platform immediately identified anomalies, reported leads, and fully cooperated with the investigation. When asked if the agency would conduct a thorough probe of Polymarket, the CFTC spokesperson offered no response.

Yet Michael S. Selig has repeatedly referenced Coplan’s past run-ins with regulators in public speeches.

In March, he delivered the keynote address at an event hosted by the Digital Commerce Council in Washington—a trade group advocating for crypto and prediction market firms. The venue was packed. The interviewer on stage was Teresa Goody Guillén, legal counsel for Binance founder Changpeng Zhao. Binance had previously paid $150 million in fines to the CFTC in 2023.

Selig publicly attacked the “enforcement-first regulatory model,” citing Polymarket’s experience as a textbook example. He declared: “Enforcement teams even raided founders’ homes. Fortunately, things have now changed for the better.”

Original authors: Sharon LaFraniere, David Yaffe-Bellany, The New York Times

Original translation: Saoirse, Foresight News

Original source: Odaily Planet Daily