House Oversight Expands Insider Trading Probe to Hyperliquid, Crypto.com, and PredictIt

House Oversight Committee Chairman James Comer has issued formal information requests to three additional crypto platforms, widening a congressional investigation into whether prediction markets and exchanges have adequate safeguards against insider trading.

The new targets are Hyperliquid Labs, Crypto.com, and Aristotle Exchange, the company that owns PredictIt. Comer is seeking identity-verification records and trade surveillance data from all three. The expansion follows an earlier phase of the investigation that already put Kalshi and Polymarket under scrutiny, signaling that Congress is treating this as a sector-wide compliance question rather than a dispute with any single platform.

The investigation was triggered by reports of a Hyperliquid short position opened before an October 2025 tariff announcement was made public. Comer cited that episode directly in his requests, framing it as evidence that information may have leaked from government channels into crypto trading activity before official disclosure. Hyperliquid is a decentralized perpetuals exchange that operates without a central order book intermediary, which makes conventional trade surveillance considerably more complex than on a centralized platform.

Committee Chairman James Comer asked the three platforms for records on identity checks and trade surveillance, citing reports of a Hyperliquid short placed before an October 2025 tariff announcement was public.

The platforms are unlikely to accept that framing without pushback. Industry advocates have argued that prediction markets serve a legitimate price-discovery function, and that a single anomalous trade does not establish a pattern of insider activity. Crypto.com and similar centralized exchanges have separately contended that the burden of proof for insider trading should sit with regulators, not with platforms, and that aggressive compliance mandates risk increasing costs in ways that reduce market liquidity. There is also a live empirical question: the October 2025 tariff trade may have been placed on the basis of publicly available signals rather than non-public government information.

Those counterarguments face a difficult political environment. With lawmakers now considering tighter trading rules for prediction markets, the investigation has moved beyond fact-finding into the early stages of potential legislation. The committee's dual focus on identity verification and trade surveillance suggests two distinct regulatory vectors: know-your-customer requirements that would reduce anonymity on platforms like Hyperliquid, and real-time monitoring obligations that would require exchanges to flag statistically unusual positions ahead of major policy announcements.

Prediction markets have grown sharply in mainstream visibility since 2025, with platforms processing hundreds of millions of dollars in volume on political and macroeconomic outcomes. That visibility has attracted regulatory attention in proportion. The CFTC took enforcement action against Polymarket in 2023 for operating without proper registration, and Congress has since watched the sector expand without a comprehensive federal framework governing it. The current probe fits a pattern of post-hoc scrutiny following rapid growth, a dynamic that has played out repeatedly across crypto subsectors. California moved earlier this year to restrict public officials from certain crypto activities, signing legislation that bars them from launching memecoins, reflecting a broader state and federal impulse to close perceived gaps between crypto conduct and existing ethics rules.

For Hyperliquid specifically, the scrutiny presents a structural challenge. Decentralized exchanges operate without the centralized user databases that make KYC compliance straightforward on platforms like Crypto.com. Providing the identity records Comer is requesting may require Hyperliquid Labs to either acknowledge limitations in its current verification infrastructure or explain how it attributes on-chain addresses to real-world identities. Either answer carries regulatory and reputational consequences.

The committee has not set a public deadline for responses, and no subpoenas have been reported. The breadth of the expansion, five platforms now under scrutiny, indicates this investigation is building toward a legislative recommendation rather than winding down.