DEX in the City: The CFTC's Kalshi Rescue and the Limits of Emergency Power

**Jane Khodarkovsky** (0:00)
I think it's a hammer when you need a scaffold, and it's the same way I felt about Mika. But with AI, I'm not really sure what problem it's actually going to solve, because I do think just like with privacy and like forcing people to provide too much information, you're going to actually push more companies out of the EU. And we certainly need some, I'm, everyone knows, like I believe we need some form of regulation when it comes to the misuse of AI, whether it's for child exploitation material or deepfakes. But this type of like overregulation is not what I think is going to stop bad actors from using these tools or finding ways to circumvent and use it anyway.
Hi, y'all.

**Jessi Brooks** (0:55)
Welcome to Decks in the City, where the wallets are cold and the takes are hot. Before we get going, remember, we're all lawyers, but we're not your lawyers. Nothing you hear on Decks in the City is legal or financial advice, and it doesn't create an attorney-client privilege. For the fine print, just check out unchainedcrypto.com. Before we get going, we're going to turn it over to hear from our wonderful sponsors.

**Jane Khodarkovsky** (1:18)
This episode is brought to you by 1inchAqua, the shared liquidity layer from 1inch. Back multiple liquidity positions with one wallet balance, and keep your tokens in your wallet until a swap fills.
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**Jessi Brooks** (1:38)
Guys, we have a really special episode today because both Vy and KK are out. But we have two familiar faces on screen, Jane and Jacob. I'm sure you all know both of them. Jane has been on the pod before, needs no introduction. Jacob also really needs no introduction as he hosts the Law of Code podcast. Everyone should listen to that as well. It was part of the inspiration for starting this one.
Thanks, guys, for joining.

**Jane Khodarkovsky** (2:04)
Thanks for having us.

**Jacob Robinson** (2:05)
Yeah. Thanks so much.

**Jessi Brooks** (2:07)
Of course. We had so much going on this past week, so even though my two co-hosts are off gallivanting on vacation or something, I thought it was worth just touching base on a few of them. Essentially, what we're going to focus on this week is that regulators and government officials are finally making themselves heard through loud proclamations or just loud silence that is pretty telling as well.
We have this special panel here to talk about what's happening. We're going to talk a bit about the CFTC invoking the emergency authority again to shield Kalshi, as we talked about before, SEC canceling a meeting, and then we're going to throw in some AI and cybersecurity conversations as well, and try and keep us all interested and debating a lot of these issues. So a lot of what we're going to talk about today involves regulators, and there's two we want to touch on the first segment here. So Jacob, going to turn it over to you. The CFTC has been doing a lot with a little for many years, and no exception over the past few months. Can you talk a little bit about what it's doing in prediction markets this week, although I feel like we have some story on prediction markets every week, and then how the SEC's actions in the last week might fit into that?

**Jacob Robinson** (3:27)
Yeah, so the CF, and thanks, Jessi, again, for having me. I'm glad all my begging paid off. You guys finally let me on. So the CFTC invokes Section 8A9, which is its emergency authority to direct the registered exchange, in this case, Kalshi, to take steps to what they call maintain orderly trading and ordering Kalshi to keep operating under the CA core principles, regardless of state litigation. And this is sort of an inevitable step that the CFTC took after Kalshi sort of made it clear to them that they needed this. It's been going on back and forth in New York since about October 2025, where we've seen the state attorney general get involved, Letitia James, with the latest sort of punch thrown from the state side. But this has been a back and forth where on one hand, states are saying, as all your listeners know, states are saying, these are bets, whereas Kalshi and other federally regulated exchanges are saying, no, these might look like bets, but they're actually exchanges. They're operated differently and we are regulated.
So it's an inevitable step on this long line of cases where Kalshi's tried to get the courts to stop themselves. When that fails, then they turn to the CFTC. And it's an open question whether or not that's actually going to work. So I think it's inevitable we'll see this in the Supreme Court before long. Now, if you want, I can open that up and we can chat about that, or I can jump to the SEC stuff.