White House · Wired · Polymarket · Iran · Ars Technica
The US is betting on AI to catch insider trading in prediction markets
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For most of the past year, it looked like prediction markets had kicked off a new golden age of fraud.
Key facts
- In March, Connecticut senator Chris Murphy told WIRED that he suspected White House staffers were engaged in insider trading on war-related contracts
- On April 23, federal agents arrested a US Army special forces soldier for trades he made on Polymarket last year tied to the capture of former Venezuelan leader Nicolas Maduro
- 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
- On Polymarket, traders raked in fortunes from suspiciously timed bets on geopolitical events like the raid on Venezuela and the Iran War
Summary
Now, however, the Commodity Futures Trading Commission, which oversees prediction markets, wants you to know that it’s watching very, closely. 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. 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.) Prominent prediction market companies have recently started touting all the work they’re doing to catch sketchy bettors.