Intrade Ceases Trading Activity | Hacker News Reader

Intrade Ceases Trading Activity

intrade.com

155 pointskevinwmerritt55 comments

The title here is misleading. They are "ceasing trading activity" ... "as we do all we can to resume operations as promptly as possible." The statement alludes to "financial irregularities" which are being investigated.

Well, "financial irregularities which in accordance with Irish law oblige the directors ..." is legalese that, in essence, means something like "we've caught someone [stealing from the cookie jar / lying about losses] on a so large scale that the board is not sure if the company will be able to pay the money it owes to everyone".

There are just a few cases where the law obliges directors to do something; I'm not an expert in Irish legislation, but most likely they are clearly enumerated in a single law.

Well, it's worse than that. No significant company would shut down in this manner unless they were 100% certain that they did NOT have the money to pay their debts.

... or a court ordered them to do this.

I don't think that's true. Financial regulations tend to force you to pull the plug as soon as you can no longer prove that you are solvent. There's a large range between "cannot prove we do" and "can prove we do not".

I don't think it's misleading. Reading that statement by Intrade makes the situation seem that dire.

Read between the lines. There's likely been fraud here. They aren't coming back from this.

The money is gone. Either fraud (founders were skimming off the top all along), or they got hacked (and the 'hack' could have been an inside job as well). That's why they're not paying out - they don't have enough funds available. Same thing happened previously to one of the largest bitcoin exchanges[1].

[1]http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+...

Or it could be the most likely explanation: the existing US federal investigation of Intrade is moving to the next phase, a grand jury has issued a sealed indictment of Intrade staff, and their assets have been frozen.

After they got shut out of the US market in November 2012, they lost a lot of customers overnight and had to pay all of them out in full. It might be something like the Madoff case, where he might still be free, if the financial crisis hadn't hit and made his customers cash out.

Unless you have strong evidence to support that statement I'd suggest deleting it as it's potentially libellous.

That's not even close to libelous in the U.S., even if false.

I imagine saying a financial institution has lost all of it's customers money (without evidence) would be considered libellous in most countries.

It might be in most, but not in the U.S. You basically have to cause actual damage, have malicious intent, and actually be factually untrue. In the U.S. the comment you're speaking about would be considered mere speculation/conjecture.

I assume it depends on a state basis, but IMHO the OP comment doesn't read like speculation, it reads like someone making a factual statement with the intention to influence the readers perception of the company in question.

They are paying out:

Settle all open positions and calculate the settled account value of all Member accounts immediately.

> At this time and until further notice, it is not possible to make any payments to members in accordance with their settled account balance until the investigations have concluded.

It seems they are not paying out at this time.

That just means they're tallying the numbers. Sending out checks is another story.

http://i.imgur.com/Y6GYW7e.png

Are they paying or not?

is it related to http://www.cftc.gov/PressRoom/PressReleases/pr6423-12 and the subsequent collapse in volume http://www.ft.com/intl/cms/s/0/e0c9eea0-7ae4-11e2-915b-00144... ?

Probably. Interesting line the CFTC is taking though, since it is only able to regulate US citizen's use of commodity markets and predictions are a commodity by the definition of the law as far as I can tell [1]. The 'fiction' here is that you're actually going to by pork bellies or soy beans or oranges, when really your just buying and trading the 'right' to buy these commodities at a particular price. So "The 49'ers will win the super bowl" is a "bet" but it isn't really a commodity.

So while I could buy intrade as an unlicensed betting parlor I don't see them as a commodities trader. That said, folks don't like it when you make money that they think they should be making.

[1] http://www.cftc.gov/ConsumerProtection/EducationCenter/Futur... - "A commodity futures contract is an agreement to buy or sell a particular commodity at a future date"

Agree with you on the 49ers example but Intrade had a few contracts that were closer to the ones regulated by the cftc: the price of oil, gold, the DOW, etc.

Real life version of the ban hammer. What are they called? Power tripping moderators or something like that.

Intrade shutting down? Huh, what are the odds of that?

Your joke is even better since one of the Intrade contracts was "intrade will no longer exist in X years"

Talk about an intrinsically impossible bet to win!

(at least when betting on the platform itself)

There was speculation, especially in the run-up to the 2012 Presidential election, that some of the pricing differences between Intrade and Betfair were due to the higher risk associated with trading on Intrade. So it is thought that market prices on Intrade may in fact have taken the likelihood of this event into account.

They are taking several extraordinary measures:

1. Settling all open contracts. 2. Shutting down trading. 3. Not making cash payouts.

#3 would be the end result of any of various sorts of problems. #1/#2, however, suggest there were problems with the prediction markets themselves, rather than -- for example -- straight embezzlement from the company's bank accounts.

Slightly OT: what's the current status of online gambling? There were talks of nevada and new jersey loosening restrictions, but most of those were reported by financial analysts and not by the technical community.

It's booming in some circles, millions a month probably:

https://en.bitcoin.it/wiki/Category:Gambling

sealswithclubs.eu should be mentioned here too.

The problem is that currently the closest thing to a prediction market is Bets of Bitcoin, and they use probably the bizarrest set of rules you have ever had the misfortune to lay eyes on. So.. not really an alternative at all except for the most wildly mispriced bets on it (where you can be sure to come out with a profit regardless of how much the rules screw you).

I see the wiki lists 2 other prediction markets, but they seem to handle sports only.

Thanks for exposing a market opportunity! Sounds promising, in the right jurisdiction.

Yeah. I keep hoping someone will do a bitcoin version of Intrade as a Tor hidden service. It's the logical next step.

There's also https://icbit.se for actual futures.

Prediction markets don't necessarily have to be real currency and it's a misconception that they are only accurate if you're using real money. We have run a prediction market using fantasy currency for years: http://home.inklingmarkets.com. We also run run private markets for companies...

How are you determining the accuracy of your market predictions?

Here's a blog post we wrote a few years ago about it: http://blog.inklingmarkets.com/2008/05/judging-prediction-ma...

You don't specify when you are sampling the market. It often wouldn't be surprising, or useful, that a market correctly predicts an event the day before it occurs.

Of course they don't have to use real money. But if you're happy with playmoney, nothing stops you from, say, just writing down predictions and checking how they ultimately do. (I do just this; great practice and useful in many ways.)

However, we shouldn't forget that many people aren't going to contribute their time and expertise without a concrete reward. Nor do I blame them.

Both Nevada[1] and New Jersey[2] have legalized though there's still quite a bit undecided, especially re: regulations.

1. http://www.cbsnews.com/8301-250_162-57570664/nevada-legalize...

2. http://www.nj.com/politics/index.ssf/2013/03/nj_moving_at_di...

Does anyone have any direct experience using them? Curious - not familiar with prediction markets...

Wow - this is pretty heavy. It's unfortunate, as I liked it as a view of market sentiment. It's one thing to pontificate, another to vote with dollars.

"Financial Irregularities" is never good, and I can't see this ending well.

What exactly was intrade?

https://en.wikipedia.org/wiki/Prediction_market

http://en.wikipedia.org/wiki/Intrade

Online betting.

Mobile version is still showing trade prices and other info https://m.intrade.com/#home

Time for bitcoin-based version :)

Whoa, I thought anyone today already knows that words "market"+"prediction"="scam"

Care to elaborate for the ignorant among us?

Markets are unpredictable.

Markets are only hard-to-predict in terms of future prices and returns. If all you want to do is to compare the relative value of two assets, the current price is a great place to start out. For example, the market is pretty sure that Exxon Mobil is worth vastly more than Groupon. Likewise, a prediction market does just fine at telling you stuff like "Romney is much more likely than Ron Paul to be the Republican candidate."

Interestingly enough, online prediction markets do not predict the markets, just as online dating sites don't date anyone. They provide a platform for other people to try and predict. Of course, many of these people would be wrong, but that doesn't mean the platform itself is a scam.

"market prediction" and "prediction market" are two very different things.

Iowa Electronic Market is run by the University of Iowa. It seems to be accepted that it isn't gambling and it isn't a scam.

While Intrade might have been mismanaged, there is nothing fundamentally dishonest about a prediction market.

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