THE CFTC TELLS EXCHANGES THAT BETS ON WHAT A MAN WILL SAY OR DO SETTLE ON CONDUCT THAT MAY BE “NEITHER INDEPENDENTLY GENERATED NOR EXTERNALLY VERIFIABLE” — IT HAS ALREADY FINED A CONGRESSMAN AND A TELEPROMPTER OPERATOR FOR PROVING THAT — THE REMEDY IS AN ADVISORY

The CFTC’s Division of Market Oversight issued a staff advisory on September 22 about a product it calls a mention market. These are event contracts that pay out on whether a person says certain words, shows up somewhere, or otherwise interacts with somebody. The agency’s stated reason for concern is precise. Settlement “turns on the discrete conduct of a person that may be neither independently generated nor externally verifiable.”

Plain words for that: the thing being measured is a man, and a man can be paid to do it. The agency does not have to imagine this. On July 31 it ordered George Santos to disgorge $17,569.98 and pay a $17,500 penalty for trading a contract titled “Who will attend the State of the Union?” and then posting about whether he would attend, after which the price moved his way. On August 28 it ordered Gabriel Perez, a teleprompter operator at the White House, to disgorge $107,539.02 and pay $65,000 for trading presidential mention contracts on speeches he had read in advance. KalshiEX helped with that one.

Two settled cases already. One defendant was the subject of the contract. The other had the script. The remedy announced today is a letter to the exchanges, reminding them of Core Principle 3 and asking for “complete, contract-specific analysis” when they file these products under Part 40. The contracts stay listed.

Here is the line the advisory is circling without naming. A bitcoin block settles on a number every node can recompute. A mention market settles on somebody’s account of what a man did, and the man has a position. The CFTC just described the difference in its own words and then filed it as guidance. At the time of this writing, bitcoin was $86,451.