Mike Selig Grilled Over Prediction Market Trades and Hyperliquid

• Lawmakers from both parties pressed Selig on prediction market oversight and trading.
• Democrats flagged oil trades made before Trump’s Iran policy and called for scrutiny.
• Republicans warned Hyperliquid’s offshore futures volume could still harm U.S. consumers.

CFTC Chairman Mike Selig faced sharp bipartisan criticism on Thursday. Lawmakers challenged the agency’s handling of the prediction market sector and offshore crypto derivatives. The hearing centered on products tied to politics, war, death, and perpetual futures.

The House Agriculture Committee led the questioning. Democrats focused on suspicious futures trades made before major announcements from President Donald Trump or actions by his administration. They said unnamed traders had earned hundreds of millions of dollars from those positions.

Prediction Market Scrutiny Deepens

Selig said the CFTC is committed to stopping insider trading. But the tone changed when lawmakers raised possible misconduct by people close to the president. That part of the hearing drew the strongest exchanges.

Rep. Jim McGovern asked whether Donald Trump Jr. or other Trump family members may have known in advance about a March 23 social media post from the president. The post addressed new negotiations with Iran over the war in the Middle East.

Selig said he would not play speculation games. His response came as lawmakers pressed him on the timing of certain trades.

One example stood out during the hearing. Lawmakers said traders placed about $500 million on the price of oil only 15 minutes before Trump’s post appeared. Oil prices then fell after the statement was released.

However, Democrats suggested the trades deserved closer scrutiny. The issue added to concerns about whether market-sensitive information may have reached select traders before the public.

The hearing also covered contracts tied to war and death. Some lawmakers said those products should not be treated as innovative. They argued that such contracts turn tragedy into profit.

Rep. Jim Costa said, “I don’t believe this is market innovation.” He called it “that is profiting from tragedy.”

Costa then asked whether contracts tied to war or the death of political leaders were ever meant to fall under the CFTC’s authority. Selig replied that the agency is working on a proposed rulemaking on prediction market products. He said the public would have a chance to comment.

CFTC Focus on Event Contracts and Hyperliquid

Another tense exchange focused on sports-related event contracts. Selig has argued that such contracts are different from gambling. He has also said they should remain under the CFTC’s oversight.

During the hearing, he appeared unable to clearly distinguish between an unlabeled sports bet and an unlabeled event contract tied to the same baseball game. 

Rep. Gabe Vasquez said the average consumer also could not tell the difference. He argued that this weakens the case for treating the products separately.

Republicans also pressed Selig, but from a different direction. Their concern focused on new financial products they believe could hurt the U.S. economy. 

Rep. Austin Scott raised concerns about the offshore decentralized exchange. Hyperliquid offers perpetual futures contracts and sits outside the CFTC’s direct reach. Scott said the strong volume in trades such as oil could still affect the domestic economy.

He urged the agency to find a way to hold Hyperliquid to standards similar to those faced by regulated U.S. futures exchanges. His warning came as Selig had recently said he wants to expand access to perpetual futures for everyday traders.

Related: CFTC Takes Three States to Court Over Prediction Market Control