ChainCatcher reports that Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), said the agency will continue to argue that Kalshi's election contracts are illegal and warned of potential negative consequences.

Last week, a court ruled that the CFTC overstepped its authority by opposing Kalshi's listing of election-related contracts. The CFTC has appealed the ruling. Behnam believes that allowing the CFTC to regulate election contracts could lead to the agency being drawn into investigating election-related fraud or manipulation, which is beyond its mandate.

He also said the CFTC is closely monitoring overseas prediction markets that serve US clients and will take enforcement action if any illegal activity occurs.

Previously, prediction market Polymarket reached a settlement with the CFTC for failing to register with the agency. Polymarket agreed to exit the US market.