"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."
"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 have raised concerns about fraud and manipulation, especially when US traders access offshore platforms that are blocked domestically. The Commodity Futures Trading Commission is monitoring suspicious trading activity by traders located in the United States who use virtual private networks to reach offshore markets such as Polymarket. The agency plans to pursue enforcement actions against bad actors and is expanding staffing to handle increased workload. It is also using automation and AI to analyze trading patterns, identify potential manipulation, and determine when investigations or subpoenas are needed. The CFTC uses both internal surveillance systems and third-party tools, including blockchain tracing services and market abuse detection software for centralized markets.
#prediction-markets #cftc-enforcement #crypto-trading #market-manipulation-detection #vpn-and-offshore-access
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