CFTC expands crypto team after court blocks prediction market ban

The US Commodity Futures Trading Commission revealed the first lineup of its Innovation Task Force (ITF), now headed by Michael Pascualaqua, a senior adviser to Acting Chairman Mike Selig.

The team now features blockchain lawyers who worked at leading law firms, a prediction markets consultant, and seasoned legal professionals from within the CFTC.

The move comes amid escalating jurisdictional battles over platforms such as Kalshi and Polymarket, which allow users to trade contracts on real-world outcomes ranging from elections to sports. The CFTC has argued that such products fall under federal derivatives law, not state gambling statutes, a position that has gained traction in recent court rulings.

As recently reported by Cryptopolitan, a federal judge temporarily blocked Arizona from pursuing a criminal case against prediction market operator Kalshi, siding with arguments that federal law preempts state enforcement actions in the sector. The ruling effectively paused state-level prosecution while reinforcing the CFTC’s authority over federally registered event contracts.

The CFTC welcomes five members to its Innovation Task Force

The CFTC innovation task force now includes Hank Balaban, a former Latham & Watkins crypto attorney; Eugene Gonzalez IV, a former Sidley blockchain lawyer; prediction market expert Sam Canavos; and the agency’s own Mark Fajfar and Dina Moussa. Fajfar is currently a legal veteran, while Moussa is special counsel in the Market Participants Division at the CFTC.

According to the commission, the task force will now assist it in drafting clear compliance guidelines tailored specifically for innovators working with smart contracts, AI, and prediction markets. CFTC Chairman Michael Selig remarked, “The Innovation Task Force brings together a leading team that exhibits deep expertise and an enthusiastic commitment to deliver clear rules of the road for American innovators.” 

Pascualaqua also expressed enthusiasm about leading a team that perfectly bridges seasoned regulatory know-how with outside corporate experience from massive law firms.

So far, the US SEC and CFTC have been working together to actively co-manage crypto oversight. In March, their efforts culminated in a joint release that explicitly outlines how digital tokens and transactions fit into federal securities laws. Recently, SEC Chair Paul Atkins stated that the two agencies are prepared to implement the CLARITY Act together and urged lawmakers to approve the legislation. 

Meanwhile, the CFTC also unveiled a new dedicated tracker that catalogs the agency’s milestones in promoting regulatory clarity and tech adoption. The agency’s website names three central innovation areas it is targeting: crypto and blockchain, artificial intelligence and autonomous systems, and contracts and prediction markets.

Judge Liburdi blocked the Arizona-Kalshi case at the CFTC’s request

The CFTC earned a victory in the Arizona case against prediction platforms. Federal Judge Michael Liburdi ruled in favor of the commission and issued a temporary restraining order. 

State prosecutors had formally charged Kalshi with 20 counts of unlawful wagering and election betting in a major crackdown last month. They contended that Kalshi is running an unlicensed betting site and requires a gambling license to operate.

However, the CFTC later went on the offensive, filing lawsuits against Arizona and two other states to stop them from enforcing local gambling laws against prediction markets.

Nonetheless, Arizona pushed back, arguing that prediction markets are just disguised sportsbooks that shouldn’t be federally protected, but the judge’s order successfully put the brakes on Monday’s criminal hearing.

In a public reaction on X, Kalshi’s legal counsel Robert J. DeNault welcomed Judge Liburdi’s order, calling the pause on the case “a step in the right direction.”

Selig also noted, “Arizona’s decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent, and the court’s order today sends a clear message that intimidation is not an acceptable tactic to circumvent federal law.” 

Nevertheless, aside from Arizona, states like Nevada and New Jersey have actively claimed that political and sports wagers on prediction platforms are illegal. At the same time, federal lawmakers have begun drafting bills to place hard boundaries around the industry.

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