The Commodity Futures Trading Commission (CFTC) is trying to chase insider trading across crypto, oil futures, and prediction markets while its own headcount is being carved down. The agency has lost 24% of its staff since Donald Trump returned to office, putting it at its lowest staffing level in 15 years. Prediction markets now let traders bet real money on government raids, wars, elections, sports, celebrity events, Fed decisions, court fights, crypto policy, and almost every messy public event with a deadline. The cuts happened under Caroline Pham, a Republican nominated by Biden and later promoted by Trump to acting chair. CFTC cuts enforcement staff while insider-trading risks spread across prediction markets A former senior CFTC official allegedly said the staffing cuts hit the wrong people. “There were cuts that were not exactly logical,” the former official said. “They targeted people who were experienced and well-regarded. Real enforcement lawyers were fired. And there was a major reduction in trial attorneys.” Chairman Michael Selig, who was appointed under Trump, has said the agency is filling empty seats left after the Elon Musk-backed Department of Government Efficiency, or DOGE, pushed resignations across the federal workforce. “To the extent there are any gaps, we’re filling those gaps,” Michael said. “But thanks to our renewed focus on efficiency and bringing on new technologies, we are operating more effectively and efficiently than we ever have before.” He also said, “There are no gaps in our ability to fulfill our mission.” Michael has pointed to AI as one reason the smaller workforce can still function. He said the technology helps review public comments for prediction-market rules. Staffers can use Microsoft (MSFT) Copilot to draft memos, reports, and presentations. He also said software now helps process company applications that used to be handled through emails and manual checks. A recent CFTC report said applications from firms seeking approval for prediction-market exchanges are at record levels. Lawmakers question Selig as crypto, oil, and political bets strain the agency Michael asked Congress earlier this year to fund 108 enforcement workers, down from 140 filled positions in 2025, a 23% drop in the division that is supposed to catch market abuse. The agency’s Chicago office went from 20 enforcement lawyers to zero, according to CNN. At Michael’s first hearing as CFTC chair, lawmakers from both parties pressed him on whether he needs more funding, more staff, or new laws to control prediction markets. Rep. Nikki Budzinski, an Illinois Democrat, was not sold on the staffing story. “I have deep concerns around the ability they’ll have to provide the proper oversight that taxpayers in this country deserve from the CFTC,” Nikki said. “He referred to efficiencies, which to me, is code for mass layoffs.” Nikki has put forward a bipartisan bill that would stop executive branch political appointees, the president, lawmakers, their families, and other covered people from betting on government actions through prediction sites. Since Michael’s hearing, at least two more Democratic lawmakers have backed the bill. Democrats also questioned Trump-linked ties to the sector. Trump Media & Technology Group (DJT) has announced plans for its own prediction platform. Donald Trump Jr. is a paid adviser to Kalshi and an investor in Polymarket, the two biggest names in the space. The Trump administration cleared Polymarket last year to serve US customers, though its American site is not fully running yet. Polymarket’s top rival, Kalshi , meanwhile, had to issue $2.2 million in refunds and now faces lawsuits after a disputed market tied to Iran’s Supreme Leader Ali Khamenei, who was killed by the US and Israel during the war they started unprovoked. Kalshi also punished three congressional candidates after finding that they bet on their own races. Prediction exchanges must police themselves first. Michael told lawmakers the companies are the “first line of defense” against insider trading. Once the CFTC approves an exchange, the company can certify that each market follows federal law. The CFTC had 535 employees by February this year after layoffs, buyouts, and early retirements. Even if Congress approves Michael’s request for $410 million and 650 full-time jobs, the CFTC would still be smaller than it was during most of Trump’s first term. The former CFTC official said the agency will have to pick which cases it can actually fight. “They’re going to have a lot of work to do, and they are going to have to triage,” the official said. “Some stuff will go unaddressed. They won’t be able to pursue as many matters as they would’ve at full strength.” The crypto card with no spending limits. Get 3% cashback and instant mobile payments. Claim your Ether.fi card.
