Last fall, a high-stakes struggle unfolded inside the red brick walls of an obscure federal agency.<\/p>\n
Three companies \u2014 each with ties to the Trump family\u2019s business empire \u2014 needed the Commodity Futures Trading Commission to bless their ambitions in the white-hot field of prediction markets<\/a>.<\/p>\n A growing portion of the agency\u2019s portfolio, prediction markets allow Americans to bet on everything from whether the United States will take over Cuba to what color tie President Trump will wear next. The moneymaking opportunities were breathtaking, but the companies\u2019 practices were causing a stir.<\/p>\n Senior career officials worried about whether Crypto.com was treating small bettors fairly. They feared that a second firm, Polymarket, did not have strong enough protections against fraud. A third, an offshoot of the crypto firm Gemini, had yet to pass the agency\u2019s required review to open for business.<\/p>\n Despite these concerns, Caroline D. Pham, then acting chairman of the commission, and her senior counsel intervened to help the firms get what they wanted, according to people familiar with the situation who spoke on condition of anonymity for fear of repercussions.<\/p>\n By Christmas, the agency had put two top officials who had raised questions about the companies on leave, barred them from the office and placed them under internal investigation. Three other senior officials who had enforced laws involving cryptocurrencies \u2014 another industry linked to the Trumps \u2014 suffered the same fate.<\/p>\n None of those officials were told what they had done wrong. But current and former agency staffers said in interviews that the commission\u2019s work force took away a clear message: Don\u2019t cause trouble for those industries.<\/p>\n The suspensions were just one of many ways in which the C.F.T.C., the primary regulator of a specialized sector of the financial markets, has been mowed down by the powerful business interests it is supposed to oversee, a New York Times investigation found.<\/p>\n In the past 16 months of the Trump administration, the commission has shrunk its work force, purged career officials, sharply curtailed crypto enforcement and helped out prediction markets at virtually every turn, The Times found.<\/p>\n The gutting of the agency is particularly notable because of the Trump family\u2019s deep ties to the crypto and prediction industries. The Trumps have sold their own digital currencies, generating enormous wealth<\/a> for the family, while striking deals with prediction market operators as well.<\/p>\n The C.F.T.C.\u2019s transformation has been muscled through by leaders with connections to those industries. Ms. Pham recently left the agency to work for a crypto company that has a partnership with<\/a> Polymarket. Her senior counsel, Brigitte Weyls, was hired by a prediction market company whose application she had helped shepherd.<\/p>\n Michael S. Selig, the 36-year-old current chairman, represented crypto firms<\/a> and worked with prediction markets as a corporate lawyer. A Republican appointed by Mr. Trump, he is now the sole commissioner because the president left all the other board seats vacant.<\/p>\n That highly unusual arrangement gives Mr. Selig unilateral authority to file lawsuits and issue new rules as he polices two industries at the center of the president\u2019s business empire.<\/p>\n \u201cPresident Trump only acts in the best interests of the American public,\u201d said Davis Ingle, a White House spokesman. \u201cThere are no conflicts of interest.\u201d<\/p>\n The agency\u2019s pivot is another example of how the Trump administration has bent a previously independent regulatory agency to its will, similar to the changes at the Securities and Exchange Commission<\/a>. Both commissions now embrace the president\u2019s view that regulators have been too punitive toward industry.<\/p>\n \u201cI\u2019ve been through an almost equal number of Republican and Democratic administrations, and there was always a belief you had to have strong enforcement,\u201d said Gretchen Lowe, a 30-year agency veteran who retired last year from a top enforcement job. \u201cThis is really the first time that politics have affected the C.F.T.C. in such a dramatic way.\u201d<\/p>\n Ms. Pham and Ms. Weyls did not respond to requests for comments. But in a public statement last year, Ms. Pham claimed<\/a> that the agency\u2019s enforcement division had abused the government\u2019s prosecutorial powers.<\/p>\n Polymarket said it had strong safeguards, and Crypto.com said it fully abides by all federal regulations. Gemini did not respond to questions. A spokeswoman for the C.F.T.C. declined to discuss the treatment of any particular staff members or the agency\u2019s handling of specific cases.<\/p>\n A weakened C.F.T.C. poses risks for millions of Americans who buy crypto or bet on prediction markets, as well as for the broader financial systems with which these new businesses are increasingly intertwined. Both industries have struggled to control fraud and abuse. Crypto schemes are rampant<\/a>, while insider trading has emerged as a major concern<\/a> on prediction markets.<\/p>\n In an interview, Mr. Selig said that during the Biden administration, the commission had gone overboard, turning minor violations into court cases. He insisted that it was now focused on major wrongdoing and is not playing favorites.<\/p>\n \u201cIf you\u2019re committing fraud, manipulation, abuse, insider trading in our markets, whether it\u2019s in crypto or anything else, our enforcement division is watching and will be a cop on the beat,\u201d he said.<\/p>\n His tough talk belies the agency\u2019s track record in the second Trump era. The C.F.T.C. has announced only two cases involving digital currencies. Both were against individual operators accused of fraud, not against more powerful crypto firms.<\/p>\n That contrasts with more than 80 such cases brought during the Biden years, either in civil court or administratively. Even during Mr. Trump\u2019s first term, before his family turned into a crypto juggernaut, the C.F.T.C. announced more than two dozen cases involving crypto.<\/p>\n On the prediction market side, the agency has switched from an opponent to an ally in legal battles over how the markets should be regulated. It has announced just one case in the second Trump era, against an individual accused of insider trading.<\/p>\n The commission, first set up primarily to watch for skulduggery in markets for farm goods like pork bellies, has backed off enforcement just as its responsibilities have rapidly expanded.<\/p>\n The C.F.T.C.\u2019s watchdog role over speculative financial trading already gives it oversight of prediction markets, a booming industry. The two leading platforms took<\/a> in a total of $50 billion in trades in 2025; this year, they took in that much in just March and April.<\/p>\n Now the White House plans to give the agency an even broader portfolio, backing legislation<\/a> that would hand it more authority over crypto regulation.<\/p>\n At the same time, Trump administration cuts have sliced away at the agency\u2019s work force. It was always small for a government office, with about 760 employees at its peak in 2015.<\/p>\n As of March, it had about 550 workers \u2014 fewer than since the depths of the 2009 financial crisis.<\/p>\n Retreat on Crypto<\/p>\n In February 2025, a month after Mr. Trump\u2019s inauguration, several C.F.T.C. attorneys were enjoying the long Presidents\u2019 Day weekend. One was relaxing in the white-painted lodge of a Vermont ski resort. Another was at a classical music performance in New York.<\/p>\n Then their phones started buzzing. Their holiday was about to be shredded.<\/p>\n The call came from Brian Young, the agency\u2019s enforcement director, conveying a directive from Ms. Pham.<\/p>\n A former C.F.T.C. intern who grew into a skilled networker, Ms. Pham, 45, has moved back and forth between government and the finance industry. President Joseph R. Biden, Jr. named her as a commissioner in 2022, when a Republican spot opened up on the bipartisan board.<\/p>\n By the time Mr. Trump elevated her to acting chair, she had a reputation as a disrupter and had a habit<\/a> of<\/a> posing<\/a> for<\/a> friendly<\/a> photos<\/a> with executives in the industries her agency oversees.<\/p>\n Even so, her Presidents\u2019 Day fiat was a stunner, seemingly impossible to execute. She wanted the lawyers to drop the agency\u2019s lawsuit against a crypto company called KuCoin.<\/p>\n It was a big case for the little agency.<\/p>\n Under the Biden administration, most cryptocurrencies were regulated by the Securities and Exchange Commission, which treated them like stocks and bonds traded on Wall Street. But a quirk in how crypto is designed gave the C.F.T.C. authority over certain speculative transactions, including trading of Bitcoin, the largest digital currency.<\/p>\n In a landmark case, the agency had forced Binance, the world\u2019s biggest crypto exchange, to pay a $1.35 billion penalt<\/a>y.<\/p>\n KuCoin presented another opportunity to send a message to the markets that it took its crypto oversight seriously.<\/p>\n Based in the Seychelles, KuCoin had just agreed to pay nearly $300 million<\/a> after pleading guilty in a case brought by the Justice Department, which said it had flouted laws designed to catch criminals and prevent illicit transactions. KuCoin had also tentatively agreed to settle charges the C.F.T.C. brought against the firm<\/a> for running an unregistered operation.<\/p>\n Ms. Pham did not have the authority to simply kill the case. She needed to enlist a majority of the commission. With two Democratic commissioners still serving, her prospects of that were dim.<\/p>\n As a solution, the staff attorneys did the next best thing. They began rewriting the proposed settlement, citing in court an executive order by Mr. Trump that called for a friendlier stance toward crypto.<\/p>\n While negotiations with the C.F.T.C. were still underway, KuCoin announced last year that it would start offering two<\/a> new<\/a> cryptocurrencies created by World Liberty Financial, the Trump family\u2019s start-up crypto venture. The listing of those digital coins was a boost for World Liberty, giving it credibility and access to more customers.<\/p>\n The case dragged on, with the C.F.T.C. finally settling with KuCoin in March of this year. Its parent company was fined $500,000,<\/a> a fraction of the multimillion dollar penalty the agency\u2019s attorneys originally expected.<\/p>\n In a statement, KuCoin said its decision to offer World Liberty\u2019s coins merely reflected \u201cthe ordinary course of its business\u201d and had nothing to do with the charges it faced. A World Liberty spokesman said that many exchanges list its coins.<\/p>\n The agency also dropped at least five investigations into other crypto companies, including a late-stage inquiry into a major exchange, according to government documents and former staff members.<\/p>\n In the spring of 2025, Ms. Pham\u2019s office initiated investigations of three senior enforcement division officials who had worked on various crypto cases, sending a chill through the ranks: Ms. Lowe, the enforcement division\u2019s chief counsel and principal deputy; Manal Sultan, the deputy director; and K. Brent Tomer, the chief trial attorney.<\/p>\n The reasons given to them were vague, such as \u201cthe handling of certain enforcement matters.\u201d<\/p>\n The agency later ousted Ms. Sultan and Mr. Tomer, citing the administration\u2019s effort to shrink the government. Two trial attorneys who had handled crypto cases were demoted. Ms. Lowe left.<\/p>\n More than half a dozen former agency officials said in interviews that they believed Ms. Pham deliberately went after crypto attorneys.<\/p>\n \u201cThere was a sustained effort to oust enforcement staff who worked on some of the agency\u2019s more significant cryptocurrency matters,\u201d said Andrew Rodgers, a former trial attorney who resigned last year.<\/p>\n Joe Konizeski, a former attorney in the Chicago office, said he was ordered \u2014 twice \u2014 to shutter investigations of crypto operators before his job was eliminated last summer.<\/p>\n \u201cThe C.F.T.C. has said to bad actors in the crypto space that it is not coming after them,\u201d he said.<\/p>\n \u2018The president himself\u2019<\/p>\n The agency\u2019s retreat from crypto enforcement came too late for Gemini. In January 2025, just before a scheduled trial, the company agreed<\/a> to pay a $5 million fine to settle charges that it had misled C.F.T.C. staff members about a Bitcoin auction.<\/p>\n But Gemini appears to have escaped other possible consequences from that case.<\/p>\n The firm\u2019s founders, Cameron and Tyler Winklevoss, are presidential favorites. They are political donors, White House ballroom contributors, investors in a private club partly owned by Donald Trump Jr., the president\u2019s eldest son, and financial backers<\/a> of a crypto firm co-founded by another son, Eric Trump.<\/p>\n Without admitting wrongdoing, Gemini pledged as part of its court settlement not to publicly assert that the charges against it were groundless. Yet, five months later, it filed a complaint with the C.F.T.C.\u2019s inspector general attacking the case and the attorneys behind it.<\/p>\n Tyler Winklevoss posted<\/a> the complaint on X, declaring: \u201cThese lawyers misused their offices and millions of taxpayer dollars to engage in trophy-hunting lawfare against Gemini to advance their careers.\u201d<\/p>\n By at least one account, the Winklevoss twins did not stop there, but used their complaint to influence who ultimately led the agency.<\/p>\n After putting Ms. Pham temporarily in charge, Mr. Trump in February 2025 selected Brian Quintenz, a former commissioner and a board member of a prediction market company, to lead the agency. But Mr. Quintenz said on social media in September that his nomination foundered because he refused to promise that he would support Gemini\u2019s complaint against the agency.<\/p>\n Mr. Quintenz released what he said were private texts<\/a> in which Tyler Winklevoss insisted he treat Gemini\u2019s complaint as the highest priority and said he would be \u201chappy to raise this issue with the president himself.\u201d<\/p>\n Mr. Quintenz wrote that after he balked, the Winklevoss twins complained about him to Mr. Trump. At the end of September, the president pulled Mr. Quintenz\u2019s nomination.<\/p>\n A representative for Gemini declined to comment on the texts at the time. A White House spokesman said the president \u201cnominates America First patriots that are aligned with his agenda.\u201d Mr. Selig declined to comment on Gemini\u2019s complaint.<\/p>\n Interventions<\/p>\n Gemini had more asks coming.<\/p>\n Its affiliate, Gemini Titan, had been trying to break into prediction markets since 2020 but had failed to win C.F.T.C. approval. Last year, Gemini re-upped its application.<\/p>\n In December, agency employees were in the middle of an examination of Gemini\u2019s submission when they were presented with an unusual document. It was a draft memo, sent by Ms. Weyls, recommending that the application be approved.<\/p>\n Typically, staff members write such recommendations, then forward them to the commissioners \u2014 not the other way around. And the review was still underway.<\/p>\n The application was swiftly approved<\/a>.<\/p>\n It was one of three times in quick succession that Ms. Pham and Ms. Weyls intervened on the side of prediction market companies doing business with the Trump family, according to the people familiar with the situation.<\/p>\n Crypto.com already had an authorized prediction market by the start of Mr. Trump\u2019s second term. But a brief notice in one of the company\u2019s public filings had caught some agency staff members\u2019 attention. They worried that the firm was giving large trading companies a leg up over ordinary sports bettors without fully disclosing the practice.<\/p>\n Ms. Pham and Ms. Weyls discouraged them from pursuing the matter, then cut them out of discussions with the firm, the people familiar said.<\/p>\n Officials for Crypto.com declined to comment on its discussions with the C.F.T.C. They said the firm was upfront about its practice, had a level playing field and kept its disclosures in place.<\/p>\n Crypto.com is a close business partner of Trump Media & Technology Group, a publicly traded company in which the president is the largest shareholder. Among other agreements, Crypto.com and Trump Media struck in October what they described as an exclusive deal<\/a> to work together on a prediction market.<\/p>\n Trump Media did not respond to a request for comment.<\/p>\n Perhaps the most consequential case involved Polymarket, which had been in and out of trouble with the agency for several years. In 2022, the firm paid<\/a> a $1.4 million fine to the C.F.T.C. for taking bets from Americans without the agency\u2019s permission.<\/p>\n Those accusations resurfaced<\/a> in November 2024, after a surge of betting on the U.S. election. The F.B.I. raided<\/a> the New York apartment of its founder, Shayne Coplan. The C.F.T.C. also pursued an inquiry.<\/p>\n The Trump administration dropped<\/a> both investigations in July. That month, Polymarket bought a licensed company, allowing it to open a new platform for American customers.<\/p>\n Nonetheless, the firm\u2019s ambitions hit a snag the following month when it sought the commission\u2019s permission to take bets through intermediaries. While that leeway could get the company more customers, it could also enable someone illegally using inside information to cloak bets and escape detection.<\/p>\n Less than two weeks after it requested that latitude, Polymarket announced<\/a> an infusion of funds from 1789, an investment firm owned partly by Donald Trump Jr. Polymarket also named him an unpaid adviser. A spokesman for Donald Trump Jr. said he has no involvement in Polymarket\u2019s dealings with federal regulators.<\/p>\n In the fall, amid a roughly six-week government shutdown, C.F.T.C. officials summoned staffers to work on Polymarket\u2019s request.<\/p>\n At a November meeting with the company, Rahul Varma, the acting director of the market oversight division, and Rachel Berdansky, the deputy director for compliance, raised questions about the strength of Polymarket\u2019s anti-fraud protections. Ms. Weyls, in a departure from the usual practice, attended the examination.<\/p>\n The same week that Polymarket got approval, the agency placed Ms. Berdansky on administrative leave and under investigation. She has now retired.<\/p>\n By the end of the year, Mr. Varma too was culled.<\/p>\n So was his predecessor, Vince McGonagle, who was working in a different office but had held up Gemini\u2019s application the year before while he headed the unit. After he was placed on leave, he left the agency.<\/p>\n So did dozens upon dozens of others. The agency\u2019s work force shrank by about a quarter last year \u2014 the biggest annual drop in at least two decades. <\/p>\n Despite the cuts, the C.F.T.C. spokeswoman said the agency has \u201cresources sufficient to fulfill our mandate.\u201d<\/p>\n Ms. Pham and Ms. Weyls also moved on, taking jobs in industries the agency regulates. Both of them followed federal ethics rules, a senior C.F.T.C. official said.<\/p>\n In March, Ms. Weyls started work as general counsel for Gemini Titan \u2014 the same company for which she had intervened.<\/p>\n Ms. Pham left the chair\u2019s office in December to join MoonPay, a crypto company that has its own prediction market aspirations<\/a>.<\/p>\n It had already announced an \u201cexclusive\u201d partner<\/a> in that endeavor: Polymarket.<\/p>\n A New Reality<\/p>\n When he arrived in December, Mr. Selig found himself alone at the top.<\/p>\n After the other commissioners left last year, Mr. Trump appointed only Mr. Selig as a replacement, leaving the rest of the seats vacant. That dismantled the system of checks and balances that once governed the C.F.T.C. and handed the new chairman sweeping authority to reshape the agency.<\/p>\n Not long after starting the job, he embarked on a speaking tour, appearing at industry conferences and on tech podcasts, where he has complained about \u201cfake news\u201d<\/a> and called prediction markets \u201ctruth machines\u201d that generate more accurate information.<\/p>\n He has sided<\/a> with the crypto industry in high-stakes policy disputes<\/a> and sued several states that attempted to regulate sports wagering on prediction markets.<\/p>\n In his interview with The Times, Mr. Selig vowed that he would also revitalize the enforcement division.<\/p>\n \u201cWe\u2019re hiring,\u201d he said.<\/p>\n Yet, the administration asked for only three additional enforcement employees from last year\u2019s budgeted total of 105. At the same time, the White House is pushing<\/a> to give the agency more authority over crypto, shifting power away from the S.E.C., which has seven times the staff.<\/p>\n Even the C.F.T.C.\u2019s highest-profile enforcement effort this year shows how its priorities appear to be shifting.<\/p>\n Last month, the Justice Department and the C.F.T.C. charged<\/a> a U.S. Special Forces soldier with using classified information to bet on Polymarket about the ouster of Nicol\u00e1s Maduro, the president of Venezuela, an operation the soldier himself was involved in.<\/p>\n Mr. Selig touted<\/a> it as evidence that the C.F.T.C. would \u201cvigilantly police\u201d the industry.<\/p>\n Buried in the indictment<\/a>, however, was an important detail: The soldier had placed the wagers on Polymarket\u2019s international platform, which the firm promised to wall off from U.S. customers when it settled with the agency in 2022. While it didn\u2019t specify his location, the indictment noted that he had logged onto Polymarket using an internet tool that the company says<\/a> it bans.<\/p>\n Joseph A. Grundfest, a Stanford Law School professor who has written about prediction markets, said that federal authorities should be investigating the company and its practices, not just prosecuting the soldier.<\/p>\n \u201cUsually when you find one ant, there are going to be more,\u201d he said.<\/p>\n When the soldier was charged, Mr. Coplan, Polymarket\u2019s founder, said<\/a> that the firm had \u201cflagged this, referred it and cooperated throughout the process.\u201d The C.F.T.C. spokeswoman declined to comment on whether the agency was investigating Polymarket.<\/p>\n But on his speaking tour, Mr. Selig has alluded to Mr. Coplan\u2019s battles with regulators.<\/p>\n