CFTC Faces Enforcement Crisis as 24% Staff Cuts Hit Insider Trading Oversight in Crypto and Prediction Markets

Gate News message, April 26 — The U.S. Commodity Futures Trading Commission (CFTC) has cut 24% of its workforce since Donald Trump returned to office, leaving the agency at its lowest staffing level in 15 years amid growing insider-trading risks across crypto, oil futures, and prediction markets. The enforcement division was hit particularly hard, dropping from 140 filled positions in 2025 to 108 requested positions—a 23% reduction. The CFTC’s Chicago office went from 20 enforcement lawyers to zero, according to reports.

Chairman Michael Selig, appointed under Trump, defended the cuts by citing efficiency gains and new technologies. He said the agency is using AI tools such as Microsoft Copilot to draft memos and process applications, allowing a smaller workforce to function effectively. “To the extent there are any gaps, we’re filling those gaps,” Michael told Congress. “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.” The staffing cuts were driven partly by the Department of Government Efficiency (DOGE), backed by Elon Musk, which pushed resignations across the federal workforce.

A former senior CFTC official disputed the efficiency narrative. “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.” The official warned that the agency will have to triage cases, leaving some matters unaddressed.

Prediction markets have emerged as a major enforcement challenge. These platforms now allow traders to bet real money on government raids, wars, elections, sports, celebrity events, Fed decisions, court fights, crypto policy, and other events with deadlines. Lawmakers from both parties have raised concerns. Rep. Nikki Budzinski, an Illinois Democrat, said she has “deep concerns around the ability they’ll have to provide the proper oversight that taxpayers in this country deserve from the CFTC,” calling the staffing cuts “mass layoffs” disguised as efficiency gains.

Specific incidents have highlighted the risks. Kalshi, one of the two largest prediction-market platforms, issued $2.2 million in refunds and now faces lawsuits after a disputed market tied to Iran’s Supreme Leader Ali Khamenei. Kalshi also punished three congressional candidates for betting on their own races. Meanwhile, Trump Media & Technology Group has announced plans for its own prediction platform, and Donald Trump Jr. serves as a paid adviser to Kalshi and investor in Polymarket, raising questions about potential conflicts of interest.

The CFTC had 535 employees by February 2026. Even if Congress approves Michael’s request for $410 million and 650 full-time positions, the agency would remain smaller than during most of Trump’s first term. The agency has delegated much of the oversight responsibility to the exchanges themselves, designating them as the “first line of defense” against insider trading.