On Monday, the law caught up with Dublin-based exchange Intrade as the company shut their virtual doors to US customers following a request from a US-regulator with the prediction market citing “legal and regulatory pressures” for the closure. The Commodity Futures Trading Commission (CFTC) filed a complaint in a federal court that charges the popular predictions market of illegally facilitating bets on a number of different markets that include future economic data, the price of gold and elections.
The CFTC complaint alleges that between September 2007 and June 25, 2012, Intrade illegally allowed everyday US investors to use the site to trade. Intrade, and parent Trade Exchange Network (TEN), claim in annual reports that contracts were not being sold to everyday investors, something the CFTC doesn’t agree with. They now want the company to pay fines and return profits that the CTFC believes were illicitly obtained.
The move follows the CFTC earlier this year rejecting a proposal made by the Chicago-based North American Derivatives Exchange (NADEX) to allow derivatives trading on US politics. The latest move only strengthens their opposition to the plan and means the US citizens don’t look like being allowed to trade on political events in the USA.
It’s now a race against time for US customers to get their money back with a message on the site explaining that residents must start closing accounts and withdrawing funds immediately. Further to that, customers won’t be charged the usual $4.99 fee due on December 1 and have until December 31, 2012 to withdraw any monies left in their accounts. Any open predictions must also be resolved by December 23 or the site will assign them “fair market value” and close them.
Intrade shot to prominence during the recent presidential election and in the months preceding it as the exchange managed to accurately predict a number of the results before they actually happened. Their election watchers are some of the best and a number of media outlets use their numbers above standard polls as they believe them to be far more accurate.