Overview
In a case that has drawn considerable media attention, the government charged Gannon Ken Van Dyke, a Master Sergeant with US Army Special Forces, with allegedly using confidential military information to purchase event contracts on Polymarket. The event contracts, acquired before the United States' February 2026 incursion into Venezuela and arrest of then-Venezuelan President Nicolás Maduro, concerned potential US intervention and whether Maduro would remain in power. Van Dyke faces five counts: unlawful use of confidential information for personal gain, theft of nonpublic government information, commodities fraud, wire fraud, and money laundering. He moved to dismiss three of them, arguing that the event contracts he purchased were not "swaps" under the Commodity Exchange Act and that the military's confidential operational information was not "property" under the federal fraud statutes, and raising constitutional challenges. Last week, Judge Garnett denied the motion, but her ruling leaves significant questions open for later stages of the proceedings.
I. Do Geopolitical Event Contracts Qualify as "Swaps"?
To establish the charged commodities fraud, the government will need to prove that Van Dyke's Polymarket transactions were "associated with a potential financial, economic, or commercial consequence" such that they constituted "swaps" under the Commodity Exchange Act. 7 U.S.C. § 1a(47)(A)(ii). In his motion to dismiss, Van Dyke argued that event contracts relating to potential US military action in Venezuela and Maduro's hold on power fell outside that definition because, like sporting events, geopolitical events were not "inherently economic." The government countered that these geopolitical event contracts were: investors exposed to Venezuelan sovereign debt and businesses connected to Venezuelan oil production, for example, could use the same contracts as economic hedges. Judge Garnett declined to resolve that dispute on the pleadings. Rather than adopting either side's characterization of the contracts, she held that their competing arguments raised factual questions that could not be resolved on a motion to dismiss.
II. Does the Military's Confidential Operational Information Qualify as "Property"?
Van Dyke argued that confidential military operational information was not "property" within the meaning of the wire fraud statute. Judge Garnett rejected that argument, relying on United States v. Girard, 601 F.2d 69 (2d Cir. 1979), which recognized the government's property interest in confidential records identifying government informants. She distinguished United States v. Blaszczak, 56 F.4th 230 (2d Cir. 2022), which held that advance information about Medicare and Medicaid reimbursement rates was not "property" or a "thing of value" because it was regulatory in character. Blaszczak, in turn, distinguished Girard on the ground that the information there had "inherent value to" the government itself. Applying that distinction, Judge Garnett concluded that the confidential operational information at issue qualified as property because of its value to the military.
III. The Constitutional Challenges
Judge Garnett then held that Van Dyke's constitutional challenges were either premature or meritless. First, Van Dyke argued that the statutory phrase "associated with a potential financial, economic, or commercial consequence" was unconstitutionally vague because it did not give him fair notice that purchasing geopolitical event contracts for "personal amusement" could constitute a crime. But the court held that, outside the First Amendment context, a vagueness challenge must be evaluated as applied to the defendant's conduct. Because the case did not implicate First Amendment concerns, and the relevant facts remained unresolved, the court found the challenge premature. It also noted that the government characterized Van Dyke's conduct differently: not as personal amusement, but as a breach of confidentiality obligations intended to generate "personal profit."
Second, Van Dyke argued that the counts premised on insider trading were unconstitutional because importing securities-law terms of art—such as "manipulative or deceptive device or contrivance"—into the commodities context would create an impermissible federal common-law crime. Judge Garnett rejected that argument, declining to treat the application of insider-trading principles in the commodities context as the creation of a new common-law offense.
IV. What Comes Next
The ruling allows the prosecution to proceed, but it does not conclusively establish that the event contracts purchased by Van Dyke were swaps or resolve his as-applied vagueness challenge. Those questions will turn on the factual record developed as the case progresses. For participants in prediction markets—and for prosecutors seeking to apply commodities-fraud statutes to those markets—the case bears watching: it could help clarify both when geopolitical event contracts fall within the Commodity Exchange Act and how insider-trading principles apply to transactions based on confidential government information.
Judge Garnett's full opinion is available here.
