The scrutiny follows reports of suspiciously-timed bets and trades tied to Middle East tensions

US diplomats have been warned against using confidential government information to place wagers tied to the Iran talks, the Wall Street Journal has reported. The warning comes amid growing scrutiny over suspiciously timed bets and trades linked to the war in the Middle East.

The US State Department has issued a memorandum reminding employees worldwide that using undisclosed official information for financial gain is a "very serious offense" that "will not be tolerated," the WSJ wrote on Thursday. The directive reportedly referenced online prediction platforms such as Kalshi and Polymarket, where users can speculate on global events.

According to the report, the memo came a week after the arrest of a US special forces soldier accused of using classified information to profit from wagers tied to the ouster of Venezuelan President Nicolas Maduro. Prosecutors allege the suspect - who has since pleaded not guilty - earned more than $400,000 through bets placed ahead of a US military raid in January.

Polymarket has faced mounting scrutiny over the Iran-related wagers, with media outlets reporting that a group of accounts earned more than $1 million through bets predicting the US-Israeli bombardment of Iran.

The problem of insider trading has also spread to traditional financial markets.

A massive short position on crude oil was placed on Wednesday one hour before a report of a possible US-Iran peace deal sent prices crashing. Energy-market analysts told MarketWatch the activity appeared suspicious, describing it as part of a broader pattern that has emerged since the start of the conflict in late February.

The Justice Department and the Commodity Futures Trading Commission are also reportedly examining at least four oil trades worth more than $2.6 billion that were placed shortly before market-moving statements by US and Iranian officials.

The scrutiny over geopolitical wagering has also drawn attention to the Trump family's links to the industry over potential conflicts of interest. The New York Times reported in January that Donald Trump Jr. had advisory ties to both Polymarket and Kalshi, and had an investment in the former through his venture firm, 1789 Capital.

READ MORE: Polymarket apologizes for allowing bets on US pilots downed in Iran

Trump himself downplayed the insider trading controversy, telling reporters he was "not happy with any of that stuff," while adding that "the whole world, unfortunately, has become somewhat of a casino."

(RT.com)