CFTC's Crypto Crackdown Sparks Internal Turmoil and Legal Battles
The US Commodity Futures Trading Commission (CFTC) has faced internal disputes over its handling of crypto and prediction market cases. Senior officials reportedly sidelined staff who raised concerns about firms like Polymarket, Crypto.com, and a Gemini affiliate. By late 2025, at least two officials questioning these practices were placed on administrative leave.
The CFTC’s approach to crypto enforcement has drawn criticism from career officials. Staff flagged issues around consumer treatment, fraud controls, and regulatory oversight linked to major platforms. Despite these warnings, then-acting chair Caroline Pham and senior counsel Brigitte Weyls allowed the firms to proceed.
Internal tensions grew after employees received a directive to avoid causing trouble in crypto enforcement. Meanwhile, the agency dropped at least five crypto investigations under the current administration, filing only two enforcement cases. In March, the CFTC launched a broader rulemaking process for prediction markets, seeking public input on event contracts and potential future regulations. It also granted no-action relief for fully collateralised event contracts on regulated exchanges, easing some reporting and recordkeeping requirements. The agency has clashed with states over prediction market oversight. On 24 April, the CFTC sued New York, accusing it of overstepping federal authority. Similar legal challenges were mounted against Arizona, Connecticut, Illinois, and Wisconsin. Officials who persisted in raising concerns faced repercussions. Some were suspended, investigated, or pushed out of the agency.
The CFTC’s actions have reshaped its enforcement landscape. Fewer crypto cases have moved forward, while prediction market rules remain under review. The agency’s legal battles with states and internal disciplinary measures signal ongoing friction over regulatory control.
