bloomberg flagged 200 million of polymarket volume as possible insider trading. how much of that is real

so the honest version is 200m of people being obvious and unknown amount of people not being obvious
 
whats being sold here is the traceability as a compliance advantage and its worth noticing polymarket said that outright, that their internal process led to nearly a hundred wallet referrals including the ones behind the only two prediction market insider cases charged in the us. thats a marketing line aimed at regulators during a period where the sector is fighting for its legal status in nine states at once and it works because its true and the reason its true is that every position every user has ever taken sits on a public ledger permanently with no expiry and no deletion. property that convicted two people applies identically to everyone else on the platform who hasn't done anything snd unlike a bank record it never ages out and nobody has to request it
 
there's a market structure consequence nobody has raised. as if event contracts on geopolitical or corporate events carry genuine insider risk, the liquidity providers have to price it. either the platforms stop listing those markets, or they list them and spreads widen to compensate for the chance you're trading agianst someone who knows.
wider spreads on the informational markets pushes volume toward sports, where information asymmetry is normal and legal and everyone accepts it. so the practical effect of enforcing insider trading law on prediction markets is to concentrate them in sports, which is the exact category the states are fighting hardest to shut down.
 
thats a genuinely good point and it hadn't occurred to me. enforcement pushing the product toward the most legally contested category
 
going back to my question about spagnuolo for a second. the thing i keep getting stuck on is the money.
twelve years at google as a staff security engineer. that's a serious salary and probably a lot of equity by now. allegedly put all of it on the line for 1.2m.
same as the clase thing. guy on a 20 million contract allegedly taking a few grand a pitch. the numbers never make sense from outside. people don' t do it because the math works, they do it because they found a thing that felt free
 
Greenpickle said:
going back to my question about spagnuolo for a second. the thing i keep getting stuck on is the money.
twelve years at google as a staff security engineer. that's a serious salary and probably a lot of equity by now. allegedly put all of it on the line for 1.2m.
same as the clase thing. guy on a 20 million contract allegedly taking a few grand a pitch. the numbers never make sense from outside. people don' t do it because the math works, they do it because they found a thing that felt free
Click to expand...
found a thing that felt free is the most accurate description of how any of this starts that ive read..
 
escalation pattern is consistent across everything documented in this area and it almost never starts at 23 positions.
it starts with one small trade to see whether the mechanism works. it works. second one is larger because the risk feels lower now its been testd. by the twentieth the behavior is normalised and the participant isn't weighing a decision anymore,he's executing.
which is also why volume of trades is what makes these findable. a single well timed position is deniable. twenty three isnt, and by the time youre at twenty three you stopped thinking of it as a decision a long time ago
 
worth noting the same logic applies to the aggregate. the flagged $200m is mostly not one sophisticated operation, its a large number of people each having found something that felt free, most of whom would fail goldenfinger's repetition test if anyone applied it.

those headline reads like organised abuse. the underlying distribution is probably thousands of individually unremarkable decisions.
 
If anyone using these platforms, nothing changes today. You are not at risk of an insider trading charge for having an opinion.

What changes over a longer horizon is the regulatory character of the venue. These cases establish that market abuse law reaches event contracts. That invites the apparatus that comes with financial markets - surveillance obligations, reporting, position monitoring, potentially registration thresholds for large participants.

That apparatus lands on the platforms first. It tends not to stay there. The endpoint of "this is a financial market" is that participants in it get treated as market participants, with the documentation that implies.

Not this year. Probably not next. But that's where the argument runs once you've won it.
 
yeah yeah no limits today. paperwork eventually. always the same order
 
still nobody has said which markets get pulled.

everyone here has spent a day arguing about methodology and swaps and none of it touches the listing decision. someone at these platforms chose to run a contract on a covert military operation. someone chose to run one on a sealed corporate announcement with a known publication date. both did big volume. both got exploited. both are still the sort of thing that gets listed next time something happens, because the volume is the business model
you can prosecute every insider on that ledger and the next market will have the same hole in it
 
going to keep an eye on the sdny docket for both of them. van dyke's lawyers said they'd move to dismiss the indictment by the 31st so that lands this week, and the pre-motion conference on the cftc side is with judge carter

and its kinda interesting question in neither case is whether the trades happened. that's on chain and not really contestable. its whether the contracts were swaps at all
if that gets decided the wrong way for the cftc,half the arguments in the kalshi state cases change overnight and none of it will have anything to do with gambling policy. it'll be a definitional ruling in an insider trading case

anyone seen anything on the spagnuolo docket, id have expected a schedule by now
 
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