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The Southern District of New York has a new top prosecutor, and he happens to know more about prediction markets than practically anyone else in federal law enforcement. Jamie McDonald was sworn in as US Attorney on July 29, replacing Jay Clayton, who left to become Director of National Intelligence.
McDonald’s resume reads like it was custom-built for this moment. He previously served as enforcement director at the CFTC, where he oversaw event contracts. He was also a partner at Sullivan & Cromwell, where his clients included Polymarket. Now he’s running the office that just filed the first-ever federal insider trading cases involving prediction markets.
Two cases, two very different schemes
The first, U.S. v. Van Dyke, was unsealed in April 2026. The defendant allegedly turned roughly $33,000 in investments into more than $400,000 in profits by trading on contracts related to the capture of Venezuelan leader Maduro. The edge? Classified military information.
The second case, U.S. v. Spagnuolo, hit the docket in May 2026. A Google engineer allegedly used internal company data to earn approximately $1.2 million through prediction market trading.
Combined, the two cases represent more than $1.6 million in allegedly illicit profits.
Why McDonald’s background matters
Most US Attorneys come from backgrounds in white-collar crime or organized crime prosecution. McDonald has that too: he previously prosecuted cases involving the Genovese crime family and former New York Assembly Speaker Sheldon Silver during an earlier stint at SDNY. But his CFTC tenure gives him something unusual: a granular understanding of how prediction market platforms actually work.
Polymarket, his former client at Sullivan & Cromwell, operates prediction markets that are predominantly categorized as swaps under the CFTC’s jurisdiction.
Standard ethics rules apply to McDonald’s new role, which means his prior representation of Polymarket would trigger recusal obligations in matters directly involving the platform. No specific recusal details have been publicly disclosed.
The regulatory environment is tightening
McDonald isn’t operating in a vacuum. His predecessor, Jay Clayton, laid the rhetorical groundwork before departing. In February 2026, Clayton publicly flagged that prediction markets were susceptible to insider trading and fraud, essentially putting the industry on notice that SDNY was paying attention.
The Van Dyke and Spagnuolo cases demonstrate that federal prosecutors can and will pursue prediction market fraud with the same tools they use against insider trading in equities: wire fraud statutes, conspiracy charges, and the full investigative resources of the FBI. The fact that your “trade” is technically a bet on an outcome rather than a purchase of securities doesn’t insulate you from prosecution.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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