"For most of the past year, it looked like prediction markets had kicked off a new golden age of fraud. On Polymarket, traders raked in fortunes from suspiciously timed bets on geopolitical events like the raid on Venezuela and the Iran War. It wasn't clear whether the US government would bother pursuing some of the most flagrant bad actors, since Polymarket's crypto-based platform was technically offshore and not regulated or licensed within the country."
"Now, however, the Commodity Futures Trading Commission, which oversees prediction markets, wants you to know that it's watching very, very closely. The agency is searching for suspicious behavior from traders within the United States who have been sneaking onto offshore markets, including Polymarket's crypto platform-which is blocked stateside-by using virtual private networks. "We're going to find them, and we're going to bring actions," agency chairman Michael Selig told WIRED this week, speaking from the CFTC's headquarters in Washington, DC."
"Selig says the agency, which is especially lean right now, is staffing up. Like so many other AI-pilled workplaces, the CFTC is also leaning into automation to handle the growing workload, including tools that analyze trading patterns and flag potential manipulation. "You've got so much data," Selig says. "When we feed it into AI, we get really great information. It can help us understand things, like where we might want to investigate, or when we might need to send a subpoena to a trader.""
"In addition to proprietary surveillance systems developed in-house, the agency's arsenal includes third-party blockchain tracing tools like Chainalysis for crypto platforms, and market abuse detection software including Nasdaq Smarts for centralized markets. (Beyond Nasdaq Smarts, the agency did not specify which AI tools it uses and declined to share more specific examples.)"
Prediction markets on offshore crypto platforms enabled traders to profit from bets tied to geopolitical events, raising concerns about fraud and enforcement. The CFTC now signals close monitoring of suspicious behavior by traders located in the United States who access blocked offshore markets, including through VPNs. The agency plans to staff up and use automation to manage a growing workload. Tools analyze trading patterns to flag potential manipulation and help decide when to investigate or issue subpoenas. The CFTC also uses blockchain tracing services such as Chainalysis and market abuse detection software such as Nasdaq Smarts for centralized markets. The agency did not name additional AI tools.
#prediction-markets #cftc-enforcement #crypto-surveillance #market-manipulation-detection #vpn-access
Read at Ars Technica
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