Online predictions market Intrade has decided to cease trading, at least for the time being, "due to circumstances recently discovered" which may involve "financial irregularities," the company announced on its homepage Sunday.
The circumstrances may "require immediate further investigation," the Board of Directors at Intrade wrote, and, over the next few weeks, Intrade "will investigate these circumstances further and determine the necessary course of action." The Dublin-based company says that it took the actions in accordance with Irish law.
As of Sunday, the company has ceased exchange trading on the website, settled all open positions and calculate the settled account value of all Member accounts immediately, and ceased all banking transactions for all existing company accounts.
All open contracts have been closed and settled at market value at the close of business on March 10, and cccount details and settled account balances can still be viewed by logging into the website. Intrade also says that will not be able to make any payments to its members "in accordance with their settled account balance until the investigations have concluded."
The company will continue the maintenance and technology operations of the exchange system so that all information is preserved properly, but it will not be able to provide telephone support or live help services at this time.
"We appreciate your custom and support over the years. We are committed to reporting faithfully the status of things as they are clarified and hope you will bear with us as we do all we can to resume operations as promptly as possible," the company said.
Intrade was founded in 2001 by John Delaney and was acquired by Tradesports in 2003. The site allowed users to bet on non-sports related events, like who would in the U.S. Presidential election, what the weather would be, or who would be elected as the new Pople. Users could also bet on financial predictions, such as what the stock market would do that day.
In 2005, Intrade found itself in trouble when Trade Exchange Network, Intrade's parent company, was forced to pay $150,000 by the Commodity Futures Trading Commission in order to settle allegations it violated the Commodity Exchange Act (CEA) by soliciting, and accepting, orders from U.S. members for commodity option contracts that were not exempted from the Commission’s ban on options, including gold, crude oil, the euro and the yen.
In November of 2012, the CTFC filed a civil complaint against Intrade for violating the 2005 settlement by once again allowing U.S. customers to trade options products prohibited by the CFTC’s ban on off-exchange options trading.
“It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt," David Meister, the Director of the CFTC’s Division of Enforcement, said in a statement at the time. "Today’s action should make it clear that we will intervene in the ‘prediction’ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTC’s regulations.”
As a result of the lawsuit, the company announced that it could no longer allow US residents to participate in its real-money prediction markets.
Details of what happened are murky right now, and it is unclear if Intrade's present circumstances have anything to do with its part troubles over commodities trading, as the company does not elaborate any further on the details of what may have transpired.
VatorNews has reached out to Intrade to find out what happened, and when the site plans to resume trading. We will update if we hear anything more.
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