Federal prosecutors in Manhattan and Washington and the Commodity Futures Trading Commission are preparing potential insider-trading charges against an unnamed U.S. servicemember suspected of earning more than $1 million on Polymarket from bets tied to U.S. military operations in Iran and Venezuela. The servicemember has been under investigation since spring over whether confidential military information was used to trade contracts linked to the timing and outcomes of those actions, with charges potentially coming this fall though no final charging decision has been made. The case could become one of the first to test whether trading on a crypto prediction market with material, non-public information can be prosecuted as insider trading. Polymarket contracts on real-world events settle in USDC, and the legal theory remains unsettled because such contracts may not qualify as securities. Prosecutors could consider securities fraud, commodities fraud, wire fraud, or statutes involving classified information and government property, and the servicemember could also face proceedings under the Uniform Code of Military Justice. U.S. authorities are separately investigating a KPMG employee suspected of related prediction-market misconduct. The matter may raise compliance expectations for stablecoin-settled prediction markets, where public blockchain records can leave a permanent transaction trail.