Kalshi may have tarnished its regulatory halo by slinging mud at a competitor.

Late Friday, Pirate Wires, a technology and culture publication owned by Founders Fund marketing executive Mike Solana, published a bombshell of a story. It documented how Kalshi, the U.S.-regulated prediction market, paid social media influencers to disparage crypto-based, offshore rival Polymarket and its CEO Shayne Coplan after the FBI raided Coplan's home this month.

Solana (no relation to the $120 billion cryptocurrency) disclosed up-front he had reasons to be biased and report what Kalshi allegedly did: Founder's Fund is an investor in Polymarket, and Pirate Wires has a paid partnership with Polymarket for ads, among other things.

Nevertheless, Solana wrote, "receipts are receipts," and the screenshots in the Pirate Wires article paint a damning picture.

One screenshot showed Kalshi employees asking former NFL wide receiver Antonio Brown to quote-tweet a post about Coplan with the comment, "this [n-word] seem[s] guilty." Brown obliged.

Another influencer, who regularly tweets Kalshi-related content, called Coplan a "lookalike" of FTX's Sam Bankman-Fried, misleadingly implying that the former committed comparable crimes. (According to The New York Times, the raid was part of an ongoing investigation into whether Coplan ran an unlicensed commodities exchange; Bankman-Fried was convicted of fraud.)

Kalshi CEO Tarek Mansour declined to comment when contacted by CoinDesk.

The Pirate Wires article caused an uproar on X. Jeff Park, head of alpha strategies at Bitwise Investments, accused Kalshi, which has long touted its status as a regulated entity, of "moral hypocrisy."

Someone — it's not clear who — apparently decided that what's good for the goose is good for the gander and launched a retaliatory smear campaign.

Shortly after Pirate Wires ran its piece, RawsAlerts, a news aggregator, posted on X that Kalshi is under investigation by "multiple agencies," including the U.S. Federal Trade Commission. The post was awkwardly written ("allegations suggest …") and did not cite any sources, even anonymous ones.

When contacted by CoinDesk, a spokesperson for the FTC declined to comment. There is no mention of Kalshi on its cases and proceedings page nor on its warning letters page.

Other accounts quickly echoed the "Kalshi is being investigated" narrative.

Polymarket flatly denied that it had anything to do with these posts: "100% not us," a spokesperson said via email.

In the tech industry, dirty tricks and smear campaigns are familiar territory. When Travis Kalanick ran Uber, it was notorious for using underhanded tactics against Lyft to make business difficult for the then up-and-coming competitor.

The Kalshi-Polymarket fracas comes at an otherwise fortuitous time for prediction markets.

Donald Trump's election victory vindicated the forecasting value of betting markets, which for most of the campaign showed him leading Kamala Harris while the polls indicated a toss-up.

Moreover, the incoming administration could create a more favorable regulatory environment. Trump campaigned as the first pro-crypto presidential candidate from a major party, and it's not hard to imagine his deregulatory agenda extending to prediction markets.

If it is true, as Polymarket claims, that the raid on Coplan's home was "political retribution" by the outgoing Biden administration for calling the election for Trump, the incoming administration might be inclined to drop the investigation.

Although it's not a crypto company, Kalshi too has chafed under regulatory supervision; it had to beat the U.S. Commodity Futures Trading Commission, led by Biden appointee Rostin Benham, in court before listing markets on the election.

Now on his way out, Benham has thrown in the towel on a proposed rule that would have banned election markets at all CFTC-supervised exchanges.

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