Former Congressman George Santos has settled with the Commodity Futures Trading Commission (CFTC), agreeing to pay a fine exceeding $35,000 amid allegations that he unlawfully profited from a Kalshi market speculating on his attendance at this year's State of the Union address.
While Santos did not admit to any wrongdoing, he accepted a financial penalty nearly double his alleged illicit profits as well as a three-year trading ban from the CFTC, seeking to avoid further legal complications. A federal investigation established that Santos manipulated social media to affect the price of contracts tied to his attendance at the address before ultimately cashing out his holdings in the Kalshi market.
Santos’s attorney, Joe Murray, commented, saying, "Mr. Santos has settled without admitting any of the Commission's allegations, findings, or conclusions. He chose a prompt, practical resolution rather than protracted, costly litigation, and that choice should not be mistaken for an admission of wrongdoing, because it is not one."
Details from the CFTC investigation reveal that Santos opened a Kalshi account on February 11, shortly after a market was created concerning his attendance at the State of the Union. Within days, he deposited $7,000 and concentrated all his trading on this specific market.
Investigators reported that during the trading period, Santos purchased contracts on the likelihood of his attendance. Notably, on February 22, he created a stir on the social media platform X by asking followers if he should wear a "muted or serious suit to the SOTU or a bedazzled one?" After this post, the price for the "Yes" contract surged from $0.15 to $0.70, which increased the value of his position.
Later that same day, Santos sold all 30,874 of his "Yes" contracts, earning a profit of $3,448.43, and subsequently withdrew over $10,000 from his Kalshi account, transferring the funds to a newly created Venmo account linked to his phone number associated with Kalshi.
In the days following, Santos tweeted conflicting messages about his ability to attend, initially citing travel issues but later informing a follower that he would be present. Just before the State of the Union, he declared in a video, "I am going to be there for the State of the Union in the gallery guys," while simultaneously building a position of $8,650 on the "No" side, ultimately profiting $14,390 by cashing out the following day, after failing to attend.
The CFTC's order stated, "Santos acted willfully or, at the very least, recklessly. Santos traded in an event contract where he could influence the outcome of the underlying event and knowingly made misleading public statements and omissions about his activities in relation to the underlying event to influence the contract price for the benefit of his trading position."
Santos, expelled from the U.S. House of Representatives in 2023, is a convicted felon who received a commutation from President Donald Trump last year after serving only a few months of an 87-month prison sentence stemming from charges of wire fraud and aggravated identity theft.
