Nathan BomeyAdd Axios as your preferred source tosee more of our stories on Google.Former U.S. Rep. George Santos (R-N.Y.), center, arrives at a federal court in Central Islip, New York, on April 25. Photo: Yuki Iwamura/Bloomberg via Getty ImagesFederal regulators on Friday announced penalties for former U.S. Rep. George Santos (R-N.Y.) for allegedly manipulating and trading on prediction markets about whether he would attend the 2026 State of the Union address.Why it matters: Prediction markets and regulators are under pressure to crack down on insider trading, particularly by athletes and political officials.Driving the news: The Commodity Futures Trading Commission said Santos had agreed to pay a civil fine of $17,500 and to relinquish the $17,569.98 in profits he gained from his "unlawful trading."He is also banned from prediction market trading for three years."While buying and selling positions in this market, Santos posted on social media about his plans to attend or not attend the SOTU," the CFTC said in a statement. "In his social media posts, Santos made a series of material misrepresentations and omissions about whether he would attend the SOTU.""After these posts, the SOTU contract prices moved in a direction that was favorable to Santos' positions which allowed him to make over $17,500."The other side: Santos did not immediately respond to a message seeking comment.Prediction market Kalshi, where Santos is accused of placing his transactions, confirmed that it flagged the trades for the CFTC."Kalshi will also pursue its own enforcement action for violating exchange rules, and if monetary penalties are recovered, we'll work to reimburse affected traders," the company said in a statement.Kalshi CEO Tarek Mansour told Axios on July 14 that Santos "tried to manipulate one of the markets and within seconds it was flagged by our system. We opened investigations and within minutes we had like a hundred whistleblower complaints."Flashback: Santos was sentenced in April 2025 to more than seven years in prison after pleading guilty to charges of wire fraud and aggravated identity theft.President Trump commuted his sentence several months later, leading to his release.