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.
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".
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].
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.
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.
> 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.
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.
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.
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.
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.
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.
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...
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.
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.
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.
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.
